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Netflix Threat Make Canadian OTT Firms Demand ‘Netflix Tax’

Netflix Threat Make Canadian OTT Firms Demand 'Netflix Tax'

There is a public controversy underway in Canada regarding how Netflix and other foreign streaming firms should be regulated. Local companies are demanding the imposition of tax over these over-the-top (OTT) companies.

The government of Canada does not impose taxes on streaming services like Netflix.  Some approximations demonstrate that the streaming service provider alone could evade over 500 million Canadian dollars ($384.2 million) in Canadian sales taxes from 2015 to 2020.

The tax exemption is being disputed by members of the Canadian media oligopoly like Vidéotron, Rogers Communications, Shaw Communications, and Bell Canada.

In June, the Canadian Radio-Television and Telecommunications Commission released a policy report arguing against streaming services not subject to tax and regulatory obligations.

These domestic firms chorus the alleged unfair treatment which they are suffering against foreign entrants like Netflix.

Mindful of the lack of tax contribution to Canadian production, the “Netflix Tax” encompasses the overall gripe of the Canadian broadcasting and media companies.

This is, besides, local video-on-demand (VOD) organizations launching new streaming services to offset Netflix’s monopoly of the streaming market and to compete with other dominant players like Hulu, Amazon, and Sling TV.

The government of Canada inked an agreement with Netflix in September 2017, committing the streaming service provider to invest 500 million Canadian dollars ($384.2 million) in Canadian production for the next five years.

The new cultural policy reflects the dominant consumer views.  In a May 2018 survey, just over half of the respondents did not agree taxing digital streaming offerings, compared to 36 percent who favored the taxation.

The public debate involving Canadian VOD firms expressing their intent to subject foreign players to commitments and guidelines is ongoing. In their view, the imposition of the “Netflix Tax” would make it fair to the Canadian industry.

Netflix has become a viewership giant since its introduction to Canada in September 2010. The North American country is the first non-US market which the streaming service entered.

Viewers began unlimited access to movies and TV shows from Netflix’s library for 7.99 Canadian dollars ($6.14) monthly. In most projections, viewership soared north of 50 percent among English-speaking Canadians.

Digital media and market think-tank, eMarketer, forecasted that there would be 13.3 million Canadian Netflix viewers this year.

 

Adam Alderson
the authorAdam Alderson
Adam is an aspiring writer and an artist who plays with his band on the weekends. He loves to write about cord cutting and digital industry focused articles. His favorite movie is "Home Alone". He loves watching his home team Birmingham City FC play while listening to House Music. Favorite Teams - Basketball: Spurts, Football: NY Jets, Soccer: Birmingham City FC.

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