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Netflix responds to Canada deal criticism

netflixIn an unusual move for the SVOD giant, Netflix has responded to criticism over its latest deal with the Canadian government, which will see it place its first permanent production space outside the US for the first time.

Last month it was reported that Netflix had committed to a five-year, C$500 million (US$400 million) spend on Canadian original programming, paying no tax as a result.

A host of Canadian producers and creatives have shown concern on what the move will mean for the local economy and for local content.

More than 270 members of Quebec’s creative community called on the Canadian government to regulate digital players such as Netflix, Facebook, and Google.

In a firm response, Netflix’s Corie Wright, director of global public policy, stated the following to “set the record straight”:

  • “We have not made any deals about taxes. Our investment was approved under the Investment Canada Act. No tax deals were part of the approval to launch our new Canadian presence.
  • “Netflix follows tax laws everywhere we operate. Under Canadian law, foreign online services like Netflix aren’t required to collect and remit sales tax.
  • “The recent [subscription] price increase has nothing to do with our investment of commitments. That price increase was planned a long time ago.”

Wright responded to criticisms that Netflix got special treatment by not signing content quotas, saying that no online service has to follow the quotas common in broadcasting.

None the less, Wright said: “Netflix will use that additional investment to host pitch days, recruitment events, and support local cultural events to ensure Netflix Canada reaches vibrant Canadian production communities, including the French-language community in Quebec.”

Many had also queried the price increase of the service in August, which have been raised to C$8.99 (US$7.19) for the basic plan, C$10.99 for a standard plan and C$13.99 for the premium plan. This move was also stretched to the US, UK and other countries more recently and its something that Wright also contests .

“Our commitment marks a long term investment in Canada ^ not just a next week, next month, or next year investment,” said Wright. “That means that now that we’ve been given the green light to establish a local production presence, we have some planning and hard work to do before we can make any additional official announcements.”