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Thursday, 29 September 2011 16:16

Top That Production Incentive

Written by  Johan Kharabi
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The United States’ budget woes have led to growing calls for cutting incentive programs to improve states’ balance sheets. However, while state governments are increasingly being pressured to demonstrate the effectiveness of incentive programs, the packages have by and large remained intact throughout the country. Outside of the U.S., incentives are as strong as ever ─ as Canada’s provinces offer a slew of generous packages to attract production. This fierce foreign competition has many U.S. film commissions fighting to hold on to their incentives despite economic concerns.


Unlike the top domestic location list in P3’s July issue and the top worldwide locations in December (both based on a list of qualifications), the following is our annual lineup of locations with the highest incentives in the world.

ALASKA

The state of Alaska continues to be a dominant contender in the world of incentives, as productions can receive a transferable tax credit of up to 44 percent on qualified production expenditures. This comprises the state’s base rate of 30 percent, a 10-percent benefit for hiring Alaskan labor, an off-season production bonus of 2 percent, and another 2 percent for filming expenditures made in a rural location. The minimum-spend requirement is $100,000, and both above- and below-the-line expenditures can qualify, with no salary or project caps.

According to David Worrell of the Alaska Film Office, the only new addition to the program is that all productions must hold an Alaska Business License during shooting. But he does want to remind everyone that the state has other perks to offer. “Alaska has no personal income tax, so wages are tax-free at the state level,” Worrell comments. “In addition, Alaska has no statewide sales tax. Some communities have a local sales tax; but many do not ─ including Anchorage, Alaska’s production hub. So a production’s purchases in Anchorage are sales tax-free ─ a significant addition to our already ‘dominant’ incentive.”


CONNECTICUT

If you want to shoot in the northeast, there’s no question that Connecticut is the place where productions can benefit from with ease. Projects that spend over $1 million ─ including labor ─ can receive up to a 30-percent transferable tax credit. “The Credit may be transferred up to three times and carried forward for three years,” says Connecticut Office of Film, Television, & Digital Media Department of Economic & Community Development Tax Credit Administrator Ed Ruggiero.

For lower-level spending, the incentive package is tiered with 10 percent offered for qualifying local spend between $100,000 and $500,000 and 15 percent for productions spending between $500,000 and $1 million. According to Ruggiero, other guidelines must be met in order to participate. “Productions must complete at least 50 percent of principal photography in-state,” Ruggiero continues, “or spend 50 percent of post budget or at least $1 million in post in Connecticut in order to qualify.”


productionincentives_georgia_dsc_2773GEORGIA

According to the Georgia Film, Music & Digital Entertainment Office, Georgia’s transferable tax credit of 20 percent on qualified in-state “base investment” for qualifying productions spending a minimum of $500,000. Another 10 percent is granted, if the production includes a “qualified Georgia promotion” logo in its credits. Additionally, the tax credit applies to both in-state and out-of-state labor, and productions can take advantage of the State’s Sales & Use Tax Exemption ─ a point-of-purchase exemption on sales tax.

If it’s top-notch talent you’re looking for on the east coast, Houghton Talent, Inc. in Atlanta is adding to the many perks that the production-friendly state is drawing filmmakers with. The agency opened for business on January 22, 1990 and began actively pursuing film and television in early 2005, which is when it became SAG/AFTRA-franchised. “[We are] working with a full but ever-changing roster of union and non-union talent,” says Houghton Talent, Inc. Owner Gail C. Houghton. Houghton is grooming her daughter, Mystie Buice, to take full ownership at some time in the future. Mystie is currently the agency director and lead commercial/industrial agent.

ILLINOIS

Illinois has heated up in recent years, with big-budget productions shedding a spotlight on all the state has to offer. The state’s 30-percent transferable tax credit on qualifying local spend for productions over 30 minutes and spending at least $100,000 is certainly a helpful factor. For productions under 30 minutes, this minimum stands at $50,000. There’s also a 15-percent benefit available on in-state labor expenditures if the residents in question hail from areas of high poverty or unemployment. While there’s no project or funding cap, a salary cap is set at $100,000 per resident employee.


LOUISIANA

Down south, Louisiana is king. The state’s Motion Picture Tax Incentive gives productions a 30-percent transferable tax credit. Another 5 percent is available on the hire of Louisiana labor. The minimum sits at $300,000, which is relatively higher than minimums in other states, and there is no cap. Production companies can use tax credits against any in-state income-tax liabilities. It can claim a direct refund for 85 percent of the tax credits’ face value. “Louisiana will buy back the credits at 85 cents on the dollar,” adds Louisiana Entertainment Executive Director Chris Stelly.

Specific parts of Louisiana also offer some perks: For instance, a production can receive an additional 3-percent cash rebate on all qualified spending in Jefferson Parish as long as studio or office space is leased in Jefferson Parish. Lafayette also offers a cash rebate of the city sales tax.

“Lafayette offers productions a cash rebate of 2 percent on all qualified spending, soundstage incentives, free government-owned locations [and] free permitting,” says Julie Bordelon with the Lafayette Entertainment Initiative. “Lafayette also offers access to the Louisiana Immersive Technologies Enterprise (LITE)'s super-computer, Lafayette Utilities System (LUS)'s Fiber to The Premises Initiative for Postproduction and Animation and the University of Louisiana at Lafayette's Moving Image Arts program.”

productionincentives_michigan_grand-rapids-skyline-2007-2-largeMICHIGAN

When the topic of incentives comes up in conversation, one would be hard-pressed not to think of Michigan. In fiscal year 2012, a $25 million annual-incentive budget will power the state’s film incentive program — a smaller amount than the uncapped program that preceded it. Michigan Film Office Communications Advisor Michelle Begnoche reports that the details of how this new FY12 framework will function are still being determined by the legislature, but projects may receive up to a 40- to 42-percent refundable tax credit on qualified film expenditures through the remainder of 2011. “The incentives have undeniably been successful at putting Michigan on the radar as a great state to film projects of all sizes,” says Begnoche. Under the program, projects can receive a credit of up to 42 percent of qualifying direct expenditures in “core communities.” The base of 40 percent applies to the rest of the state. Minimum in-state spend is set at $50,000, and there’s a $2 million salary cap per employee. Out-of-state, below-the-line wages are held at 30 percent, while the above-the-line figure is 40 percent. It’s worth noting that, beginning in 2012, the incentive program will no longer come in the form of a tax credit. Begnoche explains that the incentive awards will instead be more akin to grants.

NEW YORK

New York gives eligible productions a fully refundable 30-percent tax credit on qualified costs through its New York State Film Production Credit program. According to Pat Kaufman, executive director at the New York State Governor’s Office for Motion Picture and Television Development, there’s no per-project cap and there’s rollover in the annual $420 million allocation until 2014. In addition, the state offers the N.Y. State Post Production Credit, a fully refundable 10-percent tax credit on qualified postproduction costs for work at a qualified facility in the state.

Additionally perks apply to other parts of the state, such as Suffolk County. “Suffolk County offers a competitive finishing grant of $6,000.00,” continues Michelle Isabelle-Stark with the Cultural Affairs/Film Commission division of the Suffolk County Department of Economic Development and Workforce Housing, “for independent films that do 50 percent principal photography in the County.”


PUERTO RICO

“Puerto Rico is open for business and eager to have productions come benefit from our new and revamped tax credit program,” says Mariella Pérez Serrano of the Puerto Rico Film Commission. In place for well over 10 years, the program was given a boost in March when Governor Luis G. Fortuño signed “Law 27,” establishing a 20-percent tax credit for nonresident talent (including stunt doubles). This comes in addition to the current 40-percent tax credit based on expenses in Puerto Rico. The annual cap was raised from $15 million to $50 million (and may be expanded to $350 million), and there’s a minimum-spend requirement of $100,000 (or $50,000 for short films) plus no per-project or individual wage caps. Additionally, Puerto Rico’s infrastructure incentives include a 25-percent tax credit on development or expansion costs of studios and other media-related facilities with a minimum investment requirement of $5 million per project.

INTERNATIONAL

CANADA

Canada continues to be a serious competitor. It consistently lures productions from its southern neighbor with a strong set of incentive packages across its provinces and territories. The country itself offers a refundable tax credit of 16 percent of qualifying labor expenditure. Within the country, a slew of incentive programs are up for grabs.

Alberta:  The Alberta Multimedia Development Fund (AMDF) is a cash grant on all production expenses. The provincial film commission offers an incentive program through a grant. “Alberta provides funding for screen-based content creation through the Alberta Multimedia Development Fund,” says Kimberly Evans with Alberta Film. “[It is] a unique production incentive in the form of a grant against all eligible production expenses incurred in Alberta [and] will contribute 20 to 29 percent of all eligible expenses ─ up to $5 million (Canadian) per project. This is equivalent to a 36 to 53 percent labor-based tax credit. Alberta’s level of contribution increases with Albertan ownership and the employment of Albertan key creative personnel.”

Manitoba: Manitoba offers a 30-percent refundable tax credit on all expenditures (including labor) or, alternatively, 45 percent on just labor spend. A regional tax-credit bonus of 5 percent of labor expenditures can apply for productions shot out of central Winnipeg. Repeat productions can receive another 10 percent on labor for the third film shot within two years. And if a Manitoba resident receives credit as a producer, another 5-percent credit of qualifying labor expenditures is available.

Newfoundland and Labrador:  Newfoundland and Labrador offer a refundable tax credit of 40 percent of qualifying labor expenditures, with the requirement that 25 percent of salaries and wages must be paid to eligible N/L employees.

Nova Scotia:  Nova Scotia’s refundable tax credit sits at 50 percent of eligible labor for productions in the Halifax region (Metro Halifax) or 60% for productions in other eligible regions. There’s also a 5-percent frequent-filming bonus on qualifying labor for the third film shot within two years.

Ontario:  According to Film Commissioner Peter Finestone of the Toronto Film and Television Office and Film Commissioner Donna Zuchlinski for the Industry Development Group at the ONTARIO MEDIA DEVELOPMENT CORPORATION, Ontario currently offers service productions a 25-percent tax credit on all eligible production expenditures.  This includes all postproduction activity performed in Ontario, regardless of where a production is shot.  An additional 20-percent visual effects credit that stacks on top of the other credits is also available for eligible labor expenditures for VFX, digital, animation and green screen activities. There are no per-project or per-company caps and no limits on the number of productions supported.

Saskatchewan:  Saskatchewan’s incentive program offers a base tax credit of 45 percent on all wages of all eligible above-the-line and below-the-line labor. There’s an additional 5-percent bonus of total production expenditures in the province for projects filming in smaller and rural areas (sitting 25 miles out of major cities Regina and Saskatoon). An additional 5 percent is offered for productions that attain six out of SaskFilm’s ten points covering various components. This ultimately means that productions are able to score a tax credit of up to 55 percent of eligible labor when filming in Saskatchewan. In addition to lucrative tax incentives, SaskFilm CEO/Commissioner Susanne Bell says that the province’s four state-of-the-art production studios, talented crew and film-friendly environment have put it on the map as a competitive production center.

productionincentives_quebec_mtl---nuitsmQuebec:  Quebec offers a tax rebate on 25 percent of production expenditures. Qualifying green-screen shooting, visual effects and digital animation is eligible for an additional 20-percent tax credit, bringing the total rebate to 44 percent. There’s currently no minimum spend and no caps. Quebec Film and Television Council Film Commissioner Hans Fraikin, this incentive program is steadily strengthening the province’s production. “Two consecutive production record-breaking years have deepened our labor-base to 8-crew-deep,” adds Fraikin.

TRINIDAD & TOBAGO

Trinidad & Tobago offers a rebate program between 12.5 and 30 percent, depending on the production spend. Projects ranging from $100,000 to $500,000 are eligible for the lower percentage, while productions over $1 million can receive the maximum 30-percent rebate. The program has a $300,000 project cap and minimum local spend of $100,000. According to the Trinidad & Tobago Film Commission (TTFC), an addition to the program is in the works. “We are expecting a revision to push the upper limit to 35 percent, but that's not yet approved,” says TTFC’s Chief Executive Officer Carla Foderingham.

FIJI

The Fiji Audio and Visual Commission boasts a 47-percent film tax rebate for qualifying local spend and is capped at FJ$11.75 million for feature films and FJ$50,000 for television commercials. If the local spend is less than FJ$25,000,000, the local spend must be greater than 35 percent of the total spend. If the local spend is greater than FJ$25,000,000, there is no percentage test.

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