Netflix May Have to Suspend Operations in Russia, Says Government Minister

Moscow Downtown - H 2015
AP Images

Moscow Downtown - H 2015

To avoid suspension of services local authorities expect the U.S. streamer to "initiate dialogue" with them.

Netflix may have to suspend operations in Russia until obtaining licenses, according to the government, which expects the U.S. video service to initiate dialogue with authorities to avoid suspension.

Authorities say Netflix, which launched in the country in early January, should obtain broadcasting and mass-media licenses to be able to legitimately operate in Russia.

Alexei Volin, deputy communications minister, confirmed to The Hollywood Reporter that under the existing law, Netflix would have to suspend operations until it obtained applicable licenses.

While compromise is still possible, Russian authorities expect Netflix to make the first step to initiate negotiations.

"Before entering the market, Netflix should have had consultations with Russian representatives, including regulating agencies," Volin said.

"We are ready for dialogue with Netflix, but it would be logical if the company made at least minimum efforts to initiate dialogue," he went on to say.

Netflix declined to comment.

Earlier, local competitors said Netflix has an upper hand over them in Russia as it doesn't have to pay value added tax (VAT). A law introducing VAT on all digital sales, which is going to also affect iTunes and Google Play, is expected to be adopted shortly.