BThomas Seal and Melissa Shin (Bloomberg), Netflix Tax Scrapped in Canada But Streamers Face New Levy:
Prime Minister Mark Carney’s government plans to scrap a levy on entertainment companies including Netflix Inc. and Walt Disney Co., according to a court filing, after pushback from US officials and Hollywood studios.
But the firms behind the world’s major streaming services will still have to pay under a new system yet to be implemented.
The government intends to “eliminate the base contribution requirement on streaming services,” a lawyer for Canada’s attorney general said in a July 17 letter to the Federal Court of Appeal.
“Platforms will still be required to reinvest a percentage of their revenues in Canadian and Indigenous content,” said Hermine Landry, a spokeswoman for Culture Minister Marc Miller, in response to questions.
Carney framed the change as a cost-of-living measure and compared it to a series of consumer-focused tax cuts he’s made. The government, he added, already announced C$600 million ($426 million) in annual federal funding for Canadian media to replace the financial support they would have otherwise received from the higher levy.
“Most Canadians have one or two or so of these streamers, and it’s real money. This stuff adds up,” the prime minister told reporters Wednesday. “We took the judgment there was a better way to do it, made the investment in culture, and we’ll give the direction accordingly. It’s that focus on affordability.”
Since 2024, Canada has required streaming platforms above a certain size to pay 5% of the revenue they collect in the country toward Canadian film and television productions.
In May, Canada’s media and telecommunications regulator said it would increase the levy on streamers to 15% of Canadian revenue. That infuriated Hollywood executives and Trump administration officials including Ambassador Pete Hoekstra, who said the planned move was “making a bad situation worse” by “targeting and taxing US companies, putting up new, discriminatory trade barriers.”
Carney’s government threw cold water on the regulator’s plan in June, ordering the regulator to review the 15% requirement, which it said “would impose new costs on the companies providing these services, which could ultimately fall on Canadian consumers through higher prices.”
The letter, which was first reported by The Wire Report, was filed in response to a judge’s request for an update on the government’s policy. The appeals court is hearing cases involving the Motion Picture Association — Canada, a lobby group that represents major film and television studios including Netflix, Disney and Sony Pictures.
“We intend to direct the CRTC to eliminate base contribution requirements that are outside the audiovisual sector to the broader cultural ecosystems — requirements with which platforms have no immediate connection and that have been tied up in the courts,” Landry said, referring to Canada’s media watchdog.
The “base contribution” is the government’s term for the existing 5% levy.
The government expects to publish information in the “coming weeks,” the letter filed to the court said. The CRTC referred questions to the government.
The Canadian Association of Broadcasters cautioned “it would be premature to reach any definitive conclusions from this administrative communication.” MPA Canada didn’t reply to a request for comment.
Canada’s system of funding local film and TV productions has been praised for leading to breakout hits such as Heated Rivalry and Schitt’s Creek.
