2023 has been a big year for the Trudeau government in getting new digital acts through parliament. The Online News Act launched this summer, and the Digital Services Tax Act will launch next month. Let’s break down these new acts and how they will affect our neighbours and ourselves.
Digital Services Tax Act
The Digital Services Tax Act is a new law that the Canadian government is working on. This law is about taxing big tech companies that make a lot of money from digital services like online shopping, social media, and online advertising. The government first talked about this law in 2020 and said it would start no earlier than January 1, 2024. But the exact date for when this law will start is not decided yet.
The tax will apply to companies that have a total annual revenue of more than 750 million euros, or about $1.1 billion CAD, like Netflix, and they will be taxed of 3% of their revenue. For now, we can expect no impact to our plan prices, but that is not certain. What is certain is the impact it will have on large conglomerates like Netflix who rely solely on this precious media revenue. Netflix isn’t too happy on getting a 3% tax by Canada of all countries, but it also doesn’t have much of a choice. The US government has been, as recently reported, quite chill with the new regulations, so Netflix will have to find a way to accommodate this Canadian tax into their expenses.
Online News Act
The Online News Act is another new law that became a law on June 22, 2023. This law is to help Canadian news companies get paid fairly by big online platforms (like search engines and social media sites) that share their news content.
Here’s how it works: First, the news companies and the online platforms try to agree on how much the news companies should be paid. If they can’t agree, then they have to go through a process where a third party helps them come to an agreement. If they still can’t agree after that, then each side makes a final offer and a panel of people choose one of the offers.
The Canadian Radio-Television and Telecommunications Commission (CRTC) is in charge of making sure this law is followed. The CRTC will set up a framework for fair negotiations between news organizations in Canada and the largest online platforms that distribute their news content. The CRTC will oversee the mandatory bargaining process once it is in place. The CRTC will also issue a call for proposals for an independent auditor, who will prepare an annual report on the impact of the Act on Canada’s digital news marketplace.
So far, Meta, the owner of Facebook and Instagram, is fully against this act, and all major Canadian news outlets have been shut down there. You can check by searching for CBC or CP24. Google had also opposed this act, but just recently, they reached a $300 million deal with the government.
We live in an ever-changing digital age today, and Canada wants to be in the forefront of how money is managed. However, Canada is not alone. Austrailia (which actually does exist, btw) also had an Online News Act with similar opposition and benefits a few years back. Nonetheless, it sure is going to be interesting to see how our digital services adapt to the changing laws next year.
Liberals announce legislation to set stage for digital services tax – CBC News
Building a bargaining framework for the Online News Act – CRTC
The Online News Act – Canada.ca
New laws to strengthen Canadians’ privacy protection and trust in the digital economy – Canada.ca