(Washington) A US tech coalition is urging President Joe Biden to take a hard line on Canada’s approach to digital services.
The coalition of various industry associations says the proposed digital services tax unfairly targets U.S. businesses and runs counter to efforts to set an international standard for taxation.
In a letter to President Joe Biden, these companies also complain about two bills currently before the Canadian Parliament: Bill C-11 on online streaming and Bill C-18 on online news.
American companies warn that C-11, which aims to protect Canadian content providers, could backfire and ultimately increase costs for consumers.
And they fear the Online News Act, which would compensate Canadian news media and broadcasters, violates the Canada-United States-Mexico Agreement (CUSMA).
Mr. Biden is meeting with Prime Minister Justin Trudeau beginning Thursday as part of his first visit to Canada since arriving at the White House in January 2021.
We are concerned that Canada is pursuing a number of problematic proposals and actions that could significantly limit the ability of US companies to export their goods and services and compete fairly in the Canadian market.
Excerpt from letter to Joe Biden
“It is essential that the United States hold Canada accountable to its CUSMA commitments to ensure the continued success of this important agreement. »
The letter is signed by 10 associations of different players in the digital services sector, with the support of the United States Chamber of Commerce in particular.
Americans targeted?
The coalition first denounces the “discriminatory and retroactive” Canadian tax on digital services which, according to estimates by American companies, would allow Ottawa to collect four billion US dollars over five years, mainly from American companies.
The tax, designed to ensure that digital giants pay their fair share of taxes in countries where they derive income without a physical presence, will not come into force until next year if a new multilateral tax framework does not take shape. by then.
Canada supported the idea of an “Inclusive Framework on Base Erosion and Profit Shifting”, established under the auspices of the G20 and the Organization for Economic Co-operation and Development (OECD) .
“Canada’s imposition of a tax on digital goods would set a damaging precedent, which would see other participants in the Inclusive Framework adopt similarly targeted taxes on U.S. digital services,” the coalition says. in the letter to President Biden.
Such a precedent would also be of concern with the Online Streaming Act, which the associations say looks like an effort to apply to the internet medium a regulatory system designed for the “traditionally restricted world of broadcasting”.
If passed, Bill C-11 “could have disastrous consequences for content production and distribution, and could inspire other countries to implement similar content preference systems.”
And they argue that Bill C-18 on online news, which is already fueling tensions between the federal government and tech giants like Google and Meta, appears to exclude digital companies from outside the United States. , which would violate the terms of the North American Trilateral Free Trade Agreement (CUSMA).
It is critical that the United States government hold Canada to its trade commitments and highlight the harmful global precedent that would be set if Canada implemented these measures in their current form.
Excerpt from letter to Joe Biden
Canadian Heritage Minister Pablo Rodriguez on Wednesday dismissed the notion that the bills specifically target Americans. “Any company that does this kind of business is affected by the bills, whether it’s American, European or Canadian,” Rodriguez said.
“In fact, the Government of Canada is just doing its job. There are big tech companies saying, “No, no, no, we’re not going to let you do your job”. Well, we do. »