South Africa: State Gets Behind Local TV and Film Industry with tax incentives package

Investment

The trade and industry department has announced a production incentive for the film and television industry, to boost the generation of local content and improve location competitiveness for foreign film productions in South Africa .

The incentive, which replaces a previous rebate introduced in 2004, forms part of the comprehensive national industrial policy framework, and will benefit both local and foreign producers.

Significantly, the department has lowered the qualifying threshold for foreign-based producers, and opted to increase rebates available to local producers, in a bid to stimulate the local film industry. Previously, foreign-owned productions with a qualifying South African production expenditure of R25m and above could receive a rebate of 15% of that expenditure for the production of feature films, TV movies, TV drama series, documentaries, animation and short-form animations. The threshold has now been lowered to R12m.

The department said the reduction of the threshold would make the bundling of productions unnecessary for producers. It has also introduced the South African Film and Television Production and Co-Production Scheme -- a scheme aimed at local producers to provide financial support for locally-owned productions and co-productions.

Under the incentive scheme, South African productions with a total budget of R2.5m or more qualify for a 35% rebate for the first R6m, and 25% for the rest of the qualifying expenditure. The value of the rebate for all qualifying productions is capped at R10m.

The department said the provisions of the incentive should encourage transformation of the industry, but should also provide "necessary impetus" to grow the South African film and television production industry. The department is to take other steps as part of a broader sector development strategy. These include: capacity development for emerging production companies, encouraging writers and editors through the enterprise development programme and establishing five pilot programmes in different locations to address distribution infrastructure, local content and audience expansion.

(Business Day (Johannesburg), 26 March 2008)