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(Bloomberg) — Prime Minister Mark Carney’s government plans to scrap a levy on entertainment companies including Netflix Inc. and Walt Disney Co., according to a court filing, after pushback from US officials and Hollywood studios.
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In a letter to the Federal Court of Appeal, a lawyer for Canada’s attorney general said the government intends to “eliminate the base contribution requirement on streaming services.”
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Since 2024, Canada has required streaming platforms above a certain size to pay 5% of the revenue they collect in the country toward Canadian film and television productions. The government plans to provide public funding to replace that money, according to the letter filed in court.
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In May, Canada’s media and telecommunications regulator said it would increase the levy on streamers to 15% of Canadian revenue. That infuriated Hollywood executives and Trump administration officials including Ambassador Pete Hoekstra, who said the planned move was “making a bad situation worse” by “targeting and taxing US companies, putting up new, discriminatory trade barriers.”
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Carney’s government threw cold water on the regulator’s plan in June, ordering the regulator to review the 15% requirement, which it said “would impose new costs on the companies providing these services, which could ultimately fall on Canadian consumers through higher prices.”
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The letter, which was first reported by The Wire Report, was filed in response to a judge’s request for an update on the government’s policy. The appeals court is hearing cases involving the Motion Picture Association — Canada, a lobby group that represents major film and television studios including Netflix, Disney and Sony Pictures.
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The details of the new policy and regulatory direction were not immediately clear. A spokesperson for Culture Minister Marc Miller didn’t respond to a request for comment. The Canadian regulator, known as the CRTC, referred questions to the government.
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The government expects to publish information in the “coming weeks,” the letter filed to the court said.
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The Canadian Association of Broadcasters cautioned “it would be premature to reach any definitive conclusions from this administrative communication.” MPA Canada didn’t immediately reply to a request for comment.
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Canada’s system of funding local film and TV productions has been praised for leading to breakout hits such as Heated Rivalry and Schitt’s Creek.
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