Online streaming service Netflix, won approval for its investment in Canada last week. But, since then, the business has come under fire and been accused of agreeing a special tax deal with the Canadian government.
Netflix sought to set the record straight on its investment plans and the way in which it will be taxed. Indeed, the ways a tech company sets up its tax status is currently under close scrutiny as the US IRS and European Commission are both in the midst of a crackdown.
Netflix shares ended the Tuesday US trading session 0.9% lower. After hours trading suggests it could open higher, Wednesday.
Clear tax planning
As Netflix comes under fire for an alleged Canadian tax deal – something it denies – other tech firms are facing back tax payment requests from the European Commission. Amazon and Apple are already in the midst of their own tax payment issues.
Indeed, Amazon is expected to face a further request for back tax payments from the US IRS.
Both Amazon shares and Apple shares ended the US Tuesday trading session lower, although they’re both in the green in after-hours activity.
In a blog on its website, Netflix director of public policy, Corie Right, said the company hasn’t made any tax agreements with Canada as part of the investment agreement.
“We have not made any deals about taxes,” Wright said. “Our investment was approved under the Investment Canada Act. No tax deals were part of the approval to launch our new Canadian presence.”
He added: “Netflix follows tax laws everywhere we operate. Under Canadian law, foreign online services like Netflix aren’t required to collect and remit sales tax.”
Wright also reiterated that the Netflix decision to invest some C$500 million into producing Canadian programmes and telling Canadian stories, was because they believe in the strength and quality of those stories. That includes making programmes there.
Netflix shares have performed well so far during 2017. And, it’s commitment to investing in new and exciting programming and films, suggests it will continue to be a favourite with investors.