Warning for Albanese government after US President Donald Trump pressures Canada into rescinding digital services tax

Sky News AU

a day ago

Labor has been delivered a stark warning amid negotiations with the United States after the Canadian government said it was rescinding its digital-services tax to salvage trade discussions with Donald Trump.
Canada's planned digital tax was three per cent of the digital services revenue a firm reaps from Canadian users above CA$20m in a calendar year, and payments were to be retroactive to 2022.
The tax would have targeted major tech giants including Facebook-owner Meta, Google-owner Alphabet, Apple, Amazon and others.
Trump abruptly called off trade talks on Friday over the tax targeting US technology firms, saying that it was a "blatant attack" before reiterating this on Sunday and pledging a new tariff rate on Canadian goods.
The US President and Canadian Prime Minister Mark Carney will now resume trade negotiations in order to agree on a deal by July 21, Canada's finance ministry said in a statement.
The back-and-forth comes as a warning for the Albanese government's news media bargaining incentive
which will force technology giants to pay local news outlets for their content.
After Trump began revealing his array of tariffs, Prime Minister Anthony Albanese vowed to defend the legislation targeting the tech giants.
'We have been crystal clear with the United States about what is not up for negotiation,' he said in April.
'Our government stands by our media bargaining code. We strongly support local content in streaming services, so Australian stories stay on Australian screens.'
Assistant Treasurer Daniel Mulino last week stressed the incentive remained a 'key priority' for Labor amid negotiations with the Trump Administration.
'This is a policy the government remains committed to,' Mr Mulino said, according to the Australian Financial Review.
Concerns about Australia's media bargaining code arose recently as section 899 of Trump's 'big beautiful bill' threatened a 15 per cent tax on nations the US believes unfairly treats its companies.
US Treasury Secretary Scott Bessent rolled back the legislation after reaching an 'understanding' with the G7 where American companies would be exempt for the new global minimum 15 per cent corporate tax.
Treasurer Jim Chalmers welcomed the news after engaging with Mr Bessent last week to make Australia's case against section 899.
'In that meeting he said he was progressing what he could to try and resolve these issues, and we're really pleased to see some of that progress in his announcement today,' Chalmers said.
'Australia will continue to engage constructively through the OECD on international tax rules that are fair and ensure multinationals pay their fair share in Australia."