World News

Canada panel urges taxes and domestic content rules for Netflix, other U.S. firms

By Moira Warburton

TORONTO (Reuters) – Ottawa should require U.S. tech companies such as Netflix <NFLX.O>, Amazon <AMZN.O> and Facebook <FB.O> to collect the same taxes as Canadian companies and also be subject to the same requirements for supporting domestically produced content, a Canadian government-mandated panel recommended on Wednesday.

“Our recommendations for reform are practical and actionable, providing the legislative powers and regulatory tools necessary to seize the opportunities and address the risks of the digital age,” the panel’s chairwoman, Janet Yale, a veteran Canadian telecommunications executive, said in a news release accompanying the report.

Prime Minister Justin Trudeau’s government created the six-member panel in 2018 to examine Canada’s decades-old broadcasting and telecoms laws, and advise the government on how to bring the legislation up to date with the current digital landscape.

The report stated that it was not recommending a so-called “Netflix Tax” by charging consumers an extra levy. Instead, the report recommended requiring online streaming services such as Netflix to “invest in Canadian programming that they believe will attract and appeal to Canadians.”

Netflix said it looks forward to working with the government as it modernizes Canada’s broadcasting laws.

Facebook said it has long supported “creation and discoverability” of Canadian content and would continue to invest in the Canadian news ecosystem. The company was reviewing the panel’s recommendations and welcomed “ongoing dialogue with the Government of Canada on these important subjects,” a Facebook spokeswoman said.

Amazon declined to comment.

Canadian Heritage Minister Steven Guilbeault, whose department shares responsibility for Canada’s digital laws, said in a statement that “reforms are needed to level the playing field on which conventional broadcasters and digital media companies compete.”

He reiterated the government’s commitment on Wednesday to introduce a bill modernizing the country’s broadcasting and telecoms laws before the end of the year.

The Canadian Media Producers Association (CMPA) applauded the panel’s recommendations, adding that they would help producers “bring Canadian stories to audiences both at home and around the world,” CMPA President and CEO Reynolds Mastin said.

The report recommended that the Canadian Radio-television and Telecommunications Commission (CRTC) – which regulates media and telecoms companies in Canada – be given a much broader mandate, to include three classes of companies: curation, such as Netflix and Amazon Prime; news aggregators including cable companies and sites like Yahoo! News; and sharing platforms such as Facebook and YouTube.

The panel’s recommendations are not binding.

Canadian companies are legally required to spend a proportion of programming budgets and allocate a set portion of airtime to Canadian content. Curation companies would have to do the same, under the recommended changes, while aggregators and sharers would contribute to Canadian content in a similar way as domestic companies, through levies based on a calculation of Canadian-derived revenues.

The requirement for Canadian broadcasters to ensure a minimum amount of their content is domestic was brought in during the 1970s, to ensure Canadian artists had equal footing on home airwaves with British and American acts.

(Reporting by Moira Warburton in Toronto; Editing by David Gregorio and Jonathan Oatis)