This issue is significant; the U.S. tackling Canada's digital tax can be seen as a precursor. Once Canada backs down, the EU, the UK, South Korea, India, and others will likely face similar treatment.
Canada's digital tax on American internet companies is essentially just a 3% tax on the revenue these companies made in Canada over the past two years.
This is actually quite reasonable; your company makes money here and pays some taxes.
Moreover, Canada's treatment of American internet companies is relatively lenient; the EU's Digital Markets Act (DMA) during the previous administration was much stricter.
The Information Technology and Innovation Foundation (ITIF) in the U.S. released a report this year, claiming unfair treatment.
According to its statement —
The EU forced companies like Google to completely reform their search algorithms, resulting in a 30% decrease in direct booking clicks for hotels, airlines, and retailers.
There is a mandatory requirement for large tech platforms (specifically targeting Apple and Google) to open their closed ecosystems to competitors.
Also learn from the one in the east, requiring local deployment of databases and prohibiting data from being sent abroad.
International internet platforms are required to delete illegal or harmful content within 24 hours according to EU review standards, in terms of speed and efficiency.
There is also the digital services tax; if your internet company makes money from digital services here, you have to leave the tax behind.
In addition, there is protection for copyright and support for content localization (investing a portion of local revenue in local movies, television, and music content).
If violations occur, the internet company may face a fine of 10% of its global revenue for the first offense, with higher penalties for repeated violations.
Due to the previous government's crackdown on these internet giants, no countermeasures against the EU were taken.
This is quite serious; Australia, the UK, Japan, South Korea, Turkey, India, and Canada have all jumped on board. They are all formulating similar regulations.
However, with the new administration, these internet companies have sought to please the government through donations, investment commitments, and other means.
Plus, with the administration's slogan of 'America First', although these internet companies previously supported the Democratic Party, they are still American companies.
So in tariff negotiations, making the cancellation, or at least reduction, of regulations and digital taxes on American internet companies an important condition.
