Quicksummer Entertainment LLC

New Tax Relief System for British Film Industry and hopefully soon for Estonia

Presented: March 22, 2006; Enforced April 1, 2006 - London. ● New film tax relief system will make the UK an extremely attractive place to make films supporting a consistent flow of British films to audiences worldwide. The UK Film Council today welcomed the Government�s new tax relief system for the British film industry which will help to consolidate its position as the most important film industry in the world after the US. ...confirmed the Pre-Budget announcement of a new tax relief system replacing Section 42 and Section 48 from 1st April. ● The new tax relief system will mean: • on low budget films (with production budgets up to �20 million), the tax credit level will be 20% ; • on higher budget films (with production budgets of �20 million and above), the tax credit level will be 16%; • for low budget films, the enhanced deduction will be 100% of qualifying expenditure and the payable cash element will be 25% of surrendered losses; For all other qualifying films, the enhanced deduction will be 80% of qualifying expenditure and the payable cash element will be 20% of surrendered losses. • the level of tax credit applies to the expenditure within the UK in order to be EU State Aid compliant; • the lowering of the minimum UK expenditure threshold from the proposed 40% to 25% allowing more films to qualify for tax relief. The new tax relief system will provide a solid base for the production of independent British films .... puts the UK in pole position for continuing to attract big budget US studio films ....makes the UK an attractive place to make films.... UK consolidate its position as the most important film industry in the world after the US. �The lowering of the minimum UK expenditure threshold from the proposed 40% to 25% is great news as more films will be in a position to qualify for tax relief. ... audiences boosted the share of British films at the UK box office to 34%, compared to 23% in 2004, the highest figure in 10 years. ● More on the subject: http://www.ukfilmcouncil.org.uk/news/?p=D4A1577807dce206CDGjS16C6BEA http://www.hmrc.gov.uk/budget2006/bn04.htm and http://www.hm-treasury.gov.uk/media/20F/2F/bud06_cha_134.pdf ● State Aid is any assistance involving state resources which favour a particular business sector. In order to comply with EU law the European Commission needs to be assured that the relief does not distort competition between different Member States by giving unfair assistance to the British Film Industry. ● Key facts on the UK film industry: • The UK film production industry contributed �3.1 billion to UK GDP in 2004. • Of this, inward investment films contributed about �2 billion to UK GDP and �550 million to Exchequer revenues. • The UK film industry is a substantial industry, directly employing 31,000 people in 2004 many of whom are in highly skilled jobs. The industry supported a total of 97,500 jobs, taking into account those working in its supply chain and its contribution to UK tourism, trade and merchandise sales. ● The UK Film Council is the lead agency for film in the UK ensuring that the economic, cultural and educational aspects of film are effectively represented at home and abroad. We invest Government grant-in-aid and Lottery money in film development and production; training; international development and export promotion; distribution and exhibition; and education. Our aim is to deliver lasting benefits to the industry and the public alike through: • creativity - encouraging the development of new talent, skills, and creative and technological innovation in UK film and assisting new and established film-makers to produce successful and distinctive British films; • enterprise - supporting the creation and growth of sustainable businesses in the film sector, providing access to finance and helping the UK film industry compete successfully in the domestic and global marketplace; • imagination - promoting education and an appreciation and enjoyment of cinema by giving UK audiences access to the widest range of UK and international cinema, and by supporting film culture and heritage. ● Another source on same subject: British filmmakers have given qualified support to a new government plan for tax incentives. Under it, relatively low-budget films ($36 million or less) will qualify for 20-percent tax relief, while films with budgets above that amount will receive 16 percent. Under the proposal, producers would be required to spend 25 percent of their budget in Britain in order to qualify for the tax breaks -- a proposal that was warmly received by U.K. filmmakers. Tim Willis, director of film for PACT, the independent producers' trade body in Britain, was quoted by the Guardian newspaper as saying, "We believe that the government's intention to encourage the sustainable production of British films provides the possibility for transformation of the independent production sector." However, he expressed concern about how the plan might be regarded by the European Union, which bars state aid for film productions. "We will lobby hard to ensure that the technical obstacle which has been raised can be overcome," Willis said. But Andrea Calderwood, vice chairman of PACT, said in a statement that she was concerned that the British tax-incentive plan might "seriously endanger the prospects for British and European productions, while giving maximum tax advantages to U.S. studio productions." ● Estonia makes plans to learn from UK experience, and will think of enforcing similar jurisdiction.
2006-04-09 03:25:47