Quebec Moves to Tax Netflix, Amazon, Other U.S. Streaming Services

Jan Thijs/Netflix

The Canadian province is questioning Netflix's avoiding a federal sales tax by agreeing to invest $400 million in local series like 'Alias Grace.'

Quebec has unveiled plans to impose a provincial sales tax on Netflix, Amazon and other U.S. video streamers operating locally.

The move follows the federal government last week saying it won't force U.S. digital services to collect the HST goods and services tax from local subscribers after Netflix agreed to invest CAN $500 million (US $400 million) in local TV series.

"I find it very odd that the federal government would exempt one company from a tax that all companies should collect,” Quebec finance minister Carlos Leitao told reporters in Quebec City. He added the French-speaking province wants to see Netflix's agreement with the federal government in Ottawa before unveiling his own tax plan for U.S. digital services.

"I need to know what's in that deal.... Once we have that, then we will be able to prepare a more effective strategy in our dealings with Netflix — and not just with Netflix, but with all of the businesses in this field,” Leitao said.

The HST is a consumption tax already included in cable TV and local streaming subscription bills. Canadian broadcaster Bell Media, whose CraveTV local streaming service collects the HST tax on behalf of Ottawa, welcomed Quebec's unveiling plans to tax Netflix.

"We're asking for a level playing field for all participants that ensures maximum benefits for Canadian viewers and creators. That includes an equitable tax regime and balanced approach to investment in Canadian content," the Canadian company said in a statement to The Hollywood Reporter.

As part of its agreement with Ottawa, Netflix agreed to invest $500 million over five years to help produce Canadian content for its worldwide platform, and to establish a "production presence" north of the border, its first ever outside the U.S.

Netflix and the CBC are co-producing the miniseries Alias Grace, written by Sarah Polley and directed by Mary Harron from a crime novel penned by Margaret Atwood, and Anne, a TV drama based on the Anne of Green Gables book series. Netflix and Rogers Media, which operated the now-defunct domestic streamer Shomi, also teamed up on the Canadian thriller series Between.

Leitao told reporters his province will need the cooperation of Netflix to collect a provincial sales tax as the U.S. video streaming giant has no physical presence in Canada beyond exporting its content to local users. Netflix spokesperson Bao-Viet Nguyen in a statement to the Hollywood Reporter said "Netflix pays all taxes when required by law."

Oct. 4 11 a.m. Updated with statement from Netflix over its tax collection policy.