TORONTO/MONTREAL (Reuters) – The Canadian province of Quebec has told Ottawa it will impose a sales tax on online companies, such as video streaming service Netflix Inc (NFLX.O), and called on the federal government to reconsider its own decision not to do the same, La Presse newspaper reported on Wednesday.
The move contrasts with the federal Liberal government’s policy, which opposes slapping sales tax on Netflix and other providers of online services.
In September, Ottawa announced a deal in which Netflix would spend C$500 million ($393 million) over five years to create Canadian content, with C$25 million earmarked specifically for French-language content.
Canadian content producers and broadcasters have complained that they struggle to compete against Netflix, YouTube (GOOGL.O) and other online rivals who do not pay sales tax nor contribute to funds created to support domestic content.
The finance minister of the mostly French-speaking province wrote to his federal counterpart on Tuesday to formally inform him of the decision, according to La Presse. It said the province estimates it could raise between C$10 million and C$20 million ($7.9 million and $15.7 million) a year by taxing Netflix.
The Quebec finance minister did not offer an immediate comment, while Netflix said in a statement that it pays all taxes where required by law.
Quebec charges sales tax at a rate of 9.975 percent, while the federal rate is 5 percent. Adding provincial sales tax to Netflix’s “standard” C$8.99 a month plan would add more than C$1 a month to the cost for Quebec residents.
Quebec is required to inform Ottawa 60 days ahead of any move to alter an agreement on tax harmonization and the letter comes after its legislature in October passed a motion calling on all foreign web-based companies to charge provincial sales tax on their Quebec-based customers.
Reporting by Alastair Sharp in Toronto and Allison Lampert in Montreal, editing by G Crosse