Netflix Defends $500 Million Canadian Investment: “No Tax Deals Were Part Of The Approval”


Netflix, which won approval last week  to ramp up a production unit in Canada, its first outside the U.S., is hitting back at criticism that the deal afforded Netflix special treatment and allowed it to skirt the rules governing other content players in the country.

Corie Wright, director of global public policy, argued the streaming service’s position in a lengthy blog post today. In the post, headlined “What Netflix’s half a billion CAD investment in Canada is really about,” Wright says the company is committed to being a good corporate citizen. The five-year commitment of $500 million Canadian ($400 million U.S. at current exchange rates) “means certainty that Netflix will continue to play a large role in the Canadian production community,” she wrote. “We have invested in Canada because Canadians make great global stories. That says more about the quality and strength of Canadian content, talent, and crew than a commitment of any dollar amount.”

Wright noted the company’s pledge of an additional $25 million Canadian in “market development activities” designed to connect the company more closely with “vibrant Canadian production communities,” including in French-speaking Quebec. She also debunked three main areas of criticism about the deal, including that it is somehow tied to the company’s recent subscription price hikes or that it came with valuable tax incentives. As an online service, not a broadcaster, Wright maintained, Netflix is not required to “collect or remit” taxes.

“It’s unfortunate that the government doesn’t hold all broadcasters and distributors to the same rules when they are working in Canada,” David Sparrow told the Globe and Mail newspaper. Sparrow is national president of the Alliance of Canadian Cinema, Television and Radio Artists, which represents 23,000 people working in film, television and digital media. “In Canada, we have created regulations and rules by which companies are allowed to access our Canadian people and marketplace. Netflix and the other over-the-top services are not necessarily contributing to that content creation.”

The friction north of the U.S. border has had echoes elsewhere in the world as Netflix continues its push toward a global content presence. While it is working closely with local production companies to tailor its programming to individual territories, some still view it as an interloper.

International expansion is sure to be a key theme next Monday, Oct. 16, when Netflix reports third-quarter earnings. Company shares have been trading near 52-week highs, down a fraction today at about $195.



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