The Power of Perspectives

The Canadian Bar Association

Yves Faguy

Culture

Netflix Canada: Preferential treatment or the beginning of something new?

By Yves Faguy October 4, 2017 4 October 2017

Netflix Canada: Preferential treatment or the beginning of something new?

 

It’s been a bit of bumpy ride for Heritage Minister Mélanie Joly, whose Netflix deal is drawing mixed reactions, though not in her home province of Quebec, where opposition to the deal (and her sales job) is near unanimous. The government has now passed a motion to impose provincial sales tax on the streaming entertainment giant. The major broadcasting and cable companies in the rest of Canada are also unhappy that Netflix doesn’t have to collect and remit GST or HST, which they do.

What’s the deal? Netflix has agreed with Ottawa to produce at least $500 million in new Cancon over the next five years, in both official languages. So far, only $25 million is committed to develop a market development strategy for French-language content and production.  This hasn’t been well received.  The government is also saying it won’t prop up outdated business models that aren’t viable in the media industry (though Andrew Coyne isn’t so sure). This also hasn’t been well received in some quarters.

Why not pay a sales tax? Michael Geist notes that extending GST to foreign-based digital services is still the subject of debate in Ottawa and elsewhere in the world – a point that Joly herself has tried to make. In the meantime, Geist writes, “requiring Netflix to collect and remit them without developing a broad-based approach to digital sales taxation makes no sense,” as it would not support Cancon anyway.

$500 million? Really? This part is unclear. Netflix could benefit from production tax credits that could range anywhere from 25-36 per cent of its expenses ($125-180 million), according to tax experts that La Presse interviewed.  The Heritage Minister says that Netflix Canada, under foreign control, would not be able tap in to those tax credits. We're going to need clarity on that.

Bottom line: The prevailing feeling among critics is that Netflix is getting preferential Cancon treatment and that it should pay tax like everyone else.  But defenders of the emerging policy give the government and Joly credit for addressing the challenge of making Canadian culture competitive in a global environment and trying a new tack in cultural policy. 

Why the story is far from over:  There is a plan afoot to review The Broadcasting Act, the Telecommunications Act and the Copyright Act. Last week’s announcement is only the beginning.

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International

The Catalan vote: That escalated quickly

By Yves Faguy October 2, 2017 2 October 2017

The Catalan vote: That escalated quickly

A day after the Catalan referendum, marred by disturbing images of the Spanish police’s harsh response, Spain faces a constitutional crisis and the question on everyone’s mind is “what now”? 

The question: “Do you want Catalonia to become an independent state in the form of a republic?”

The answer: Catalonia’s government reports that just under 90 per cent of voters backed independence. But turnout stood at 42 per cent.

Legally speaking: The vote is non-binding. But politics are quickly taking over.

How the main players see it: Spanish PM Mariano Rajoy defended the police’s actions, and maintains the vote is illegal. Catalan leader Carles Puigdemont said Catalonia had “won the right to statehood” before adding today that the region is not seeking “a traumatic break.” He's also calling for outside mediation.

Outside reaction: The EU is stuck in the middle. Mindful not to encourage other separatist forces within its member states, Brussels has made its position clear that the Catalan referendum was "not legal."  Canada is trying its best to be quiet about the police violence with a statement from the foreign minister’s office that solutions must be found “within the rule of law, according to the Spanish Constitution, and through peaceful dialogue.” Parti Québécois leader Jean-François Lisée is calling on all supporters of democracy to denounce the violence.

Next steps: Guy Hedgecoe outlines some possibilities, ranging from new Catalan parliamentary elections to Rajoy’s resignation. “Perhaps the least likely development: Rajoy and Puigdemont finally engage in a meaningful dialogue, possibly with outside mediation.”

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Legal marketplace

The Big Four are rivalling global law firms

By Yves Faguy September 27, 2017 27 September 2017

The Big Four are rivalling global law firms

 

Last week, PricewaterhouseCoopers announced it is opening a U.S. law firm in Washington, D.C. The firm will operate as an affiliate, ILC Legal, and will work primarily on international corporate restructuring matters. Its lawyers are being sold as “special legal consultants”, there to advise on foreign law, not U.S. law. It’s hardly the first time a member of the Big Four has made a push into the legal services space (Deloitte, E&Y and KPMG all have legal arms). But Nicholas Bruch writes that PWC seems to have dropped any pretence about keeping things on the low:

PwC’s decision to launch a US office focused on legal services is not a quiet move. The Firm has US offices. In fact, they already have two offices in Washington D.C. They could have easily built legal marketing and business development resources in their existing offices. Instead they established a US law firm. The company knew such an announcement would draw the attention of the legal press – this is almost certainly why they announced it in the manner in which they did. They also knew it would draw attention – from law firms and regulators. They clearly believed the benefits outweighed the costs.

Such boldness is new from PwC and from the Big Four. If PwC’s new office signals anything, it is that the period of cautious expansion has come to its natural end. Law firms should expect more “major announcements” from the Big Four in the future.

 

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Big picture

Putting a price on carbon

By Yves Faguy September 18, 2017 18 September 2017

Putting a price on carbon

 

U.S. President Donald Trump has signalled his administration’s intention to pull out of the Paris Climate Accord .  Meanwhile, the number of carbon pricing initiatives implemented or scheduled has almost doubled over the past five years, according to Carbon Pricing Watch 2017. Here’s a look at current pricing regimes.

 

 

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Q&A

Mark Tamminga on the future of blockchain and legal services

By Yves Faguy September 15, 2017 15 September 2017

Mark Tamminga on the future of blockchain and legal services

 

In June, Gowling WLG announced it was signing on as a founding member of the Toronto-based Blockchain Research Institute, to study the emergence of the distributed ledger technology (DLT) behind Bitcoin and other crypto-currencies. CBA National caught up with Mark Tamminga, a partner and leader of Innovation Initiatives at the firm in Hamilton, to discuss the impact of blockchain on the legal services industry.

CBA National: Where are we in terms of the evolution of blockchain?

Mark Tamminga: It’s like 1994 in our understanding of the web, where it took a universal browser like Mosaic to get people to see it is a great tool that allows for this tremendous worldwide communication platform. Really there is no such thing as the blockchain. We have multiple blockchains, so just as there are many social networks with different purposes, there will not be one blockchain to rule them all. 

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