Netflix tries to set ‘record straight’ on $500-million investment
Netflix Inc. wants to “set the record straight” on its promise to invest half a billion dollars on production of original content in Canada after “conspiracy theories” and mixed reactions from local players who feel the American streaming giant signed a sweetheart deal with the federal government.
Netflix released a statement Tuesday defending its $500-million investment over five years under the Investment Canada Act, a deal that was announced in late September as a cornerstone of Canadian Heritage Minister Mélanie Joly’s new plan for the cultural sector.
Some creators, broadcasters and politicians, particularly in Quebec, argued that Netflix received an unfair advantage because it doesn’t play by the same rules as Canadian broadcasters. It doesn’t charge and remit sales tax, it isn’t required to spend 30 per cent of its revenue on Canadian programming and it doesn’t need to follow Canadian content rules. These issues are commonly conflated and referred to as a “Netflix tax.”
But Netflix insists taxes had nothing to do with the deal and that it follows tax laws everywhere it operates, global public policy director Corie Wright said. Wright noted that since Netflix is an online service, not a broadcaster, it doesn’t have to follow CanCon quotas. The same rules apply to Canadian online streaming services such as CraveTV and Club illico.
“Some say Netflix got special treatment because the government didn’t force us to meet special content quotas as part of our investment — that’s wrong,” Wright said, adding Netflix doesn’t receive the same regulatory protections as broadcasters or use public resources such as spectrum.
Netflix will also spend $25 million on market development in Quebec, Wright said, acknowledging the company has “more work to do” on storytelling in French in Quebec.
Last week, Quebec voted to apply its 9.975-per-cent provincial sales tax on Netflix.
But the Department of Finance says it has no plans to impose a federal tax. In an emailed statement, Canadian Heritage confirmed the deal had nothing to do with tax and that all streaming services are exempt from CanCon requirements.