CHPC Committee Report

United Kingdom

Section 48
(Finance Act No.2)

A sale and leaseback arrangement.  Films with budgets under £15 million can write of 100% of production and acquisition expenditure.  In 2006 a new tax credit will replace Section 48 that will be worth 20% of production costs.

Section 42
(Finance Act No.2)

A sale and leaseback arrangement.  Films with budgets over £15 million can write off 100% of expenditure over three years.  In 2006 a new tax credit will replace Section 42 that will be similar to the one replacing Section 48.

Republic of Korea

n/a

The government has introduced a measure to give tax breaks to Korean entertainment companies that agree to set aside portions of their earnings for future projects.  Companies can designate up to 30% of their earnings as a “cultural business preparation fund” and slate it for future projects.  The amount is deducted from taxable revenues.

Republic of Ireland

Section 481
(Taxes Consolidation Act)

A tax deduction for investors who buy shares in Irish film production companies. Eighty percent of the amount invested can be written off for tax purposes.

Germany

n/a

German investors in a film financing scheme obtain a tax deduction at their marginal tax rate for up to 100% of their investment in the scheme.  There is no requirement for the film to be made in Germany.  It should be noted, however, that this present system is under review.

France

Tax Credit for Films

Offers up to 20% of qualifying technical expenses related to the production of a film, provided that the expenses are for services performed in France. The tax credit is capped at €1 million.

Belgium

Belgian Tax Shelter Law

A tax-shelter arrangement.  Companies investing in Belgian productions can deduct 150% of the investment from taxable profits. The investment must not exceed 50% of the overall cost.

Federal Tax Rebate

A cash rebate of 12.5% of a production’s Qualifying Australian Expenditure.

Division 10BA

A capital cost allowance.  Investors may deduct 100% of the capital cost of the qualifying film against their active income.

Australia

Division 10B

A capital cost allowance.  Allows a wider range of projects to qualify than that provided for under 10BA. Capital costs must be written off over two years.

Payroll Tax Exemption
(State Government
of South Australia)

Offers a payroll tax exemption.  Reduces the film’s payroll total by approximately 6%.

Employment Rebate
(State Government
of South Australia)

Offers a 10% rebate on all eligible South Australian labour expenditure.

Payroll Tax Rebate
(State Government
of Queensland)

Offers a full rebate of payroll tax to all eligible productions.

Cast & Crew Salary Rebate
(State Government
of Queensland)

Offers a rebate of 10% of salary/wage costs of Queensland cast and crew employed in a production.

Head of Department Rebate
(Sate Government
of Queensland)

Offers a cash rebate of up to AUD$50,000 for productions that employ Queensland Heads of Department.

United States

American Jobs Creation
Act 2004

Offers an immediate full tax write-off of production expenditures for domestic films with budgets up to $15 million ($20 million of production if located in a low-income community); productions with budgets in excess of $12 million may be eligible for a tax deduction of 9% of production expenditures.

Income Tax Credits (Arizona)

Offers a 20% transferable income tax credit on Arizona production expenditures. Also offers a 50% sales and use tax rebate on purchase or lease of tangible property.

California

Offers a 5% sales tax exemption on the purchase or lease of post-production equipment.  In addition, there is also no state hotel tax on occupancy. Currently, there is a bill before the California State Legislature to introduce a 12% tax credit on California production costs up to $3 million.

Film Industry Rebate Program (Florida)

Offers a 15% reimbursement of qualified Florida production expenditures.

Income Tax Credit (Georgia)

Offers a 9% transferable income tax credit on all costs incurred in Georgia; a 3% credit on wages paid to Georgia residents; a 2% credit of television productions that spend more than $20 million annually; a 3% credit for productions in distressed areas.

Motion Picture and Film Production Income Tax Credit (Hawaii)

Offers a 4% rebate on expenditures; a 7.25% rebate on hotel expenditures; a 100% tax credit on investments up to $2 million per year.

Transferable Wage Tax Credit
(Illinois)

Offers a 25% transferable income tax credit on the first $25,000 of wages paid to Illinois residents.

Investor Tax Credit; Employment/Labor Tax Credit; Sales & Use
Tax Credit (Louisiana)

Offers a 25% transferable tax credit on Louisiana spending; a 10% credit on total aggregate payroll of Louisiana residents; a 4% sales and use exclusion.

Film Production Activity
(Maryland)

Offers a wage rebate up to $12,500 per employee.

Film Production Tax Credit
(Missouri)

Offers a non-refundable income tax credit of up to 50% of Missouri expenditures or up to $500,000.

Refundable Tax Credit
(Montana)

Offers a 12% refundable tax credit on up to $50,000 in wages paid to Montana residents.

Film Production Tax Credit; Investment for New Mexico Films; Film Production Company In-Plant Training
(New Mexico)

Offers a choice of either an up-front sales tax exemption or a 15% income tax rebate on qualified expenditures; Offers equity investment of up to $80 million per project for films shot substantially in New Mexico; Offers a 50% tax rebate on salaries of eligible New Mexico labour.

Film Production Tax Credit
(New York)

Offers a 10% refundable tax credit of qualified expenditures, up to $100 million over 4 years.  The City of New York offers the same incentive with a refundable tax credit of 5% of qualified expenditures up to $37.5 million over 3 years.

Rebate Program
(Oklahoma)

Offers a rebate of 15% of eligible Oklahoma costs up to $2 million per year; a sales tax exemption on tangible property and services.

Production Investment Fund; Sales Tax Exemption;
Labor Rebate
(Oregon)

Offers a 10% rebate on eligible Oregon costs up to $250,000 per production; no sales tax on all purchases; a bill offering a 6.2% rebate on Oregon wages is expected to pass through the Oregon State Legislature.

Income Tax Credit (Pennsylvania)

Offers a 20% assignable tax credit of Pennsylvania labour costs when spending 60% of production costs in Pennsylvania.

Production Project Tax Credit (Puerto Rico)

Offers a 40% transferable labour tax credit for wages paid to Puerto Rico residents if at least 50% of shooting takes place in Puerto Rico.

Motion Picture Incentive
(South Carolina)

Offers a 15% labour withholding tax rebate; relief from payment of state and local sales and use taxes; exemption from state accommodations taxes; a 15% rebate on South Carolina goods and services purchased; an income tax credit of 10% of South Carolina investment is available for establishing a commercial production company in South Carolina; investors in South Carolina created films and/or post-production facilities are eligible for income tax credits based on their investment amount.

Film Incentive; Sales & Use Tax Exemption
(Utah)

Offers a 10% rebate on eligible Utah expenses; a sales tax exemption at the point of sale on equipment.