Friday, July 12, 2024

Netflix, Paramount Ask Canada Court to Amend New Trudeau Tax


(Bloomberg) — US streaming-service giants are asking a Canadian court to amend Prime Minister Justin Trudeau’s new 5% tax on their revenues in the country to remove the requirement that they fund local news.

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The Motion Picture Association-Canada — which represents studios including Netflix Inc., Paramount Global and Walt Disney Co. — want the Federal Court of Appeal to quash new obligations forcing foreign streaming platforms to contribute to a local independent news fund as part of the Online Streaming Act.

While the companies don’t oppose the entire 5% tax — the proceeds of which will also go to other types of Canadian programming and Black and Indigenous creators — they do oppose paying a 1.5% base contribution toward Canadian news production.

The new requirement “is a discriminatory measure” and “contradicts the goal of creating a modern, flexible framework that recognizes the nature of the services global streamers provide,” Wendy Noss, the association’s president said in a statement Thursday.

It’s the latest pushback by US companies against Trudeau’s effort to funnel money from foreign companies into the Canadian media and news sectors. Meta Platforms Inc. has blocked news on Facebook and Instagram in Canada since last year to avoid making payments under a separate law.

The country’s broadcast regulator, the Canadian Radio-television and Telecommunications Commission, estimated last month that the new tax on foreign streaming companies would raise C$200 million ($147 million) annually for the production of local news as well as other content.

In their court application dated Tuesday, the companies allege the regulator “acted unreasonably in compelling foreign online undertakings to contribute monies to support news production” and that requiring them to fund news programming was “unreasonable.”

“The requirement is neither appropriate in consideration of the nature of the services they provide, nor equitable.”

The CRTC has not yet filed a response in court and declined to comment on an ongoing legal matter.

The office of Canadian Heritage Minister Pascale St-Onge said local communication companies have supported a sustainable news ecosystem, while foreign streamers have made “massive profits” in the country without contributing to its homegrown system.

‘’As Canadians face increasing misinformation and disinformation, it is crucial to have trustworthy journalism that holds those in power accountable and asks tough questions on behalf of Canadians,” it said in a statement.

(Adds comment from the Canadian government. An earlier correction reflected the companies seek to amend the tax.)

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