Three of the world’s largest music streaming services – Amazon, Apple and Spotify – have launched a legal challenge to a new Canadian regulation that would require non-Canadian streaming services to pay a 5% streaming tax on their Canadian income. .
at the same time, Canadian Film Association (MPA)which means Netflix and a number of major Hollywood studios, including disney, Paramount, sony, NBCUniversal and Warner Bros. Discoveryhas challenged similar cases 5% tax imposed on video streaming services.
The three streaming services and Canada’s MPAs all filed separate challenges to Canada’s Federal Court of Appeal on Thursday (July 4), seeking a judicial review of the new rules. They said the regulation exceeds the authority of Canada’s broadcasting and telecommunications regulator, the CRTC.
The music streaming tax “is backward-looking and poor public policy by Canada’s current government and fails to recognize streaming’s existing contribution to music production,” Graham DavisPresident and CEO digital media association (Dima), on behalf of Amazon, Apple and Spotify, has been leading efforts to end the tax.
According to Canada’s Online Streaming ActUnder a law passed in 2023, the CRTC’s authority would be expanded from broadcasting and telecommunications to include online content.
In June, the CRTC announced that, starting this fall, it would not be affiliated with the Canadian Broadcasting Corporation and have revenues of at least $25 million Income earned in Canada will be required to be surrendered 5% Their Canadian earnings will go into a number of different funds to support Canadian music creators and broadcasters.
These include Foundation assists Canadian talent with recording (factor) and its French-Canadian equivalent, musical action,as well as Canadian Community Broadcasting Foundationproviding financial assistance to local radio stations, Aboriginal Music Officeand “a new temporary fund to support local news production at commercial radio stations.”
Likewise, video streaming services such as Netflix and Disney+ must be paid 5% Their Canadian income goes into funds, e.g. canadian media fundsubsidizes Canadian film and television productions, and independent local journalism funda fund that funds news produced by independent television stations in underserved markets.
The rules echo regulations that have existed for decades requiring broadcasters in Canada, such as cable and satellite providers. Pay for funds that support Canadian content creation.
“Implementing a 5% tax on streaming services is unsustainable, bad for consumers and fails to follow policy directives [the Department of] Canadian Heritage and Online Streaming Act.
Graham Davies, Dima
Music streaming companies argue that the new rules effectively require them to fund competition; music and video streaming services have said requiring them to fund news production in Canada exceeds the CRTC’s powers under the new law.
“The CRTC’s decision to require global entertainment streaming services to pay for local news is a discriminatory measure that goes far beyond the intent of Congress, exceeds the CRTC’s authority, and is inconsistent with the goal of creating a modern, flexible framework that recognizes the nature of the service. contradiction. wendy nutsChairman of MPA Canada.
“Our members’ streaming services do not produce local news and are not granted the important legal privileges and protections enjoyed by the Canadian Broadcasting Corporation in exchange for the responsibility to provide local news.”
“Implementing a 5% tax on streaming services is unsustainable, bad for consumers and fails to follow policy directives [the Department of] Canadian Heritage and Online Streaming Act,” DiMA’s Davis said in a statement.
“This tax could increase costs for Canadians and could breach trade obligations, leaving Canada facing economic repercussions.”
Canada is a party to several free trade agreements, such as the United States-Mexico-Canada Agreement (USMCA, formerly known as NAFTA) and the Canada-EU Trade Agreement (CETA), which prohibit Canada from discriminating against foreign companies. For example, They are taxed differently than Canadian corporations.
However, Canada provides exemptions from these rules for cultural industries in its trade agreements.
“Global studios and streaming services spend more than $6.7 billion annually in Canada producing quality entertainment for local and international audiences.”
canadian film association
A legal challenge from global streaming services has received a cold reception from representatives of the Canadian broadcast industry.
“The Canadian MPA’s lawsuit fully demonstrates the greedy attitude of foreign global streaming media towards the Canadian market,” said Kevin Desjardins,President Canadian Association of Broadcasters (taxi), as quoted globe and mail.
“As foreign global streamers remain focused on siphoning billions of dollars out of Canadian-owned media systems, the CAB remains focused on ensuring we keep Canadian journalists in Canadian newsrooms.”
Streaming services object to claims they are “siphoning” money out of Canada. Spotify emphasizes that its platform allows Canadian artists to reach global audiences,
Spotify said in a recent Loud & Clear report 92% All royalties generated by Canadian artists on the platform originate from outside Canada. These royalties amount to CAD 435 million ($322.25 million) by 2023, will increase 15% annual increaseand outpaced the revenue growth of the country’s music industry 12%says Spotify.
At the same time, Netflix has repeatedly emphasized that it has invested millions of dollars in Canadian-produced content.
“Global studios and streaming services have spent more than $6.7 billion “Canada produces quality entertainment for local and international audiences every year, with more investment in content produced by Canadian production companies last year than the CBC or the Canada Media Fund and Telefilm combined,” MPA Canada said in a statement.
The MPA–Canada also reportedly raised concerns that the CAB, which will be responsible for distributing the money raised from video streaming services, will be in a position to disclose confidential financial information about the companies paying into the fund – a concern rejected outright by the taxi.
“CAB has historically received similar confidential financial information from cable and satellite distributors and handled it appropriately without issue. We have the ability and integrity to continue to do so,” CAB’s Desjardins told globe and mail.global music business
