Netflix has received approval for its agreement with Canada to invest at least $400 million ($500 million Canadian) in content produced in the Great White North. But some in the country believe the streamer unfairly got special treatment from the Canadian government — and that Netflix should be subject to tax regulations and forced to produce a certain amount of French-language content.
In a blog post Tuesday, Corie Wright, Netflix’s director of global public policy, sought to dispel what she characterized as misconceptions and a few “conspiracy theories” about the agreement.
Among her points: Netflix didn’t reach any tax deals with the government as part of the investment, which was approved under the Investment Canada Act. Some critics had speculated that Netflix’s production-spending commitment in Canada was meant to circumvent tax rules or forestall the possibility that it would be subject to taxes in the future.
“Netflix follows tax laws everywhere we operate,” Wright wrote. “Under Canadian law, foreign online services like Netflix aren’t required to collect and remit sales tax.”
Meanwhile, French-speaking Canadian political leaders were upset that the government didn’t mandate that Netflix meet content quotas for French-language productions as part of the investment. Such quotas apply to TV broadcasters in the country. “How can we abdicate on this issue without requiring a proportion of original French-language content? I am speechless,” Luc Fortin, Quebec’s minister of culture and communications, told reporters last month.
In response to those critics, Wright said that Canadian regulations do not impose such requirements for online services and by the same token are “not eligible for the regulatory benefits that traditional media enjoy.”
“Internet-native, on-demand services like Netflix are consumer-driven and operate on the open internet,” Wright wrote. “We don’t use public property like broadcast spectrum or rights of way and we don’t receive the regulatory protections and benefits that broadcasters get (and, by the way, we’re not asking for them).”
Wright pointed out that Netflix’s deal with the Canadian government specifically covers French-language content on the Netflix platform. That involves the company’s promise to spend $25 million Canadian on “pitch days” for producers, recruitment events and other market-development activities for productions in French.
In addition, Wright said, Netflix’s recent price increase in Canada “has nothing to do with our investment or commitments. That price increase was planned a long time ago.”
In August, Netflix hiked prices of its streaming subscriptions in Canada (to $8.99 Canadian for the basic plan, $10.99 Canadian for the standard plan and $13.99 Canadian for the premium four-stream plan). The company followed with similar price increases this month in the U.S., the U.K. and other countries.
Under the agreement with Canada, Netflix will establish a permanent, multipurpose film and TV production presence in Canada. The company said it will work with Canadian producers, production houses, broadcasters, and other partners to produce original Canadian content in both English and French.
According to Wright, Netflix has invested in Canada-based productions like “Anne,” “Frontier,” “Travelers” and “Alias Grace” not in order “to fill a quota,” but because “they are great global stories.”
“We will continue to invest in great Canadian content, and in other productions made in Canada like ‘Hemlock Grove,’ ‘A Series of Unfortunate Events’ and ‘Okja,’ that are not Canadian content but that make use of, and showcase to the world, Canada’s outstanding talent, facilities, resources and locations,” she wrote.
Wright said news about Netflix’s next steps in establishing a production presence in Canada will be forthcoming. “[W]e have some planning and hard work to do before we can make any additional official announcements,” she said.
Pictured above: Sarah Gadon in “Alias Grace,” an adaptation of Margaret Atwood’s novel co-produced by Netflix, CBC, and Halfire Entertainment