Netflix fends off criticism over Canada investment

(Reuters) - Netflix Inc said on Tuesday it had received formal approval to start a C$500 million production unit in Canada and sought to quell talk that it had asked for special tax benefits for investing in its first such unit outside the United States.

The maker of Emmy-winning shows such as The Crown and Black Mirror said last month it was in talks with the Canadian government for an investment over a minimum of five years.

That decision was part of a broad review under Canadian Heritage Minister Melanie Joly, which included plans to modernize funding programs and review copyright, broadcasting and telecommunications legislation.

The government did not tax Netflix as some had proposed, opening the streaming service provider to criticism in Canada. (http://bit.ly/2wLo4Ma)

Netflix said on Tuesday its Canadian investment was approved under the Investment Canada Act, and that no tax deals were part of the approval to launch its new Canadian presence. But is also said it was not paying sales tax in line with existing Canadian laws.

"Netflix follows tax laws everywhere we operate. Under Canadian law, foreign online services like Netflix aren't required to collect and remit sales tax," said Corie Wright, Netflix's director of global public policy. (http://nflx.it/2yBTf11)

The company also said it would spend an additional C$25 million ($20 million) over five years towards "market development" in the country, hosting recruitment drives and cultural events to boost the local production community.

($1 = 1.2514 Canadian dollars)

(Reporting by Nivedita Bhattacharjee; editing by Patrick Graham and Saumyadeb Chakrabarty)