Film industry needs funds
CUT: GOVT’S TAX INCENTIVE TO LAPSE IN 2022
Lawyer says cash needed in order for South Africa to be competitive with rest the of world.
The South African film industry enjoyed some Hollywood glamour when My Octopus Teacher won an Academy Award for best documentary. However, back home there is growing uncertainty about the financial future of the industry.
A relatively unpopular tax incentive will come to an end soon, but the main concern centres on the film and television production cash incentives offered by the department of trade, industry and competition.
Industry players describe these cash incentives as “critical to prevent the implosion of the local industry”. The incentives include the foreign film and television production and post-production incentive, the SA film and television production and co-production incentive, and the SA emerging black filmmaker incentive.
Guy MacLeod, leading entertainment lawyer and director at Irish MacLeod, says international productions can spend anything between R50 million and R500 million in SA.
“We need these incentives in order to be competitive with the rest of the world.”
Although there is inherent value in shooting films in SA due to the exchange rate, there will certainly be a negative impact should the dtic incentives dry up.
The big incoming productions have shown that for every R1 the studio might get back (in the form of an incentive), they spend R4 in SA on hotels, car hire and travel, says MacLeod, whose company has been credited in academy award winners and nominees such as Invictus, District 9 and Mad Max 4: Fury Road.
Even if government is giving some money back to the industry through the incentives, it is still earning far more thanks to the industry, he remarks.
Glen Bresler, director at Meredith Harington and specialist auditor of the film industry, says the incentives have operated very well and have been around for 17 years.
Unfortunately, there have been several “hiccups” recently, with an increase in the number of rebate claims being denied for reasons that are not entirely clear.
Some of the decisions for not allowing the rebates are so illogical it’s difficult to understand what is behind the reasoning.
“It is not clear whether it is an issue of skills, politics or finances. I do not know, but what I do know is that it is quite unfortunate,” says Bresler.
Job creation
The SA Institute of Tax Professionals (Sait) said in an earlier submission to National Treasury that the film industry creates employment at a grassroots level, and that the supply chain is “massive”.
It offered some suggestions following the announcement in this year’s budget that the film tax incentive – section 12O – will lapse at the start of 2022.
“Rather than withdrawing the incentive, we recommend investigating the viability of expanding the incentive to encompass the creation and development of broader media technology, such as the intellectual property created in programmes created for broadcast for example to Netflix, as well as electronic games and similar content.”
Sait and industry players agree that the section 12O tax incentive in its current form is very technical “with barriers perceived as too complex”. It replaced section 24F, which was done away with because of abuse.
“To be honest the tax incentive was hardly ever used,” says MacLeod. “I am not really aware of any products where SA taxpayers took advantage of the incentive, purely because it was very complicated.”
Besides the incentive being complicated, people “run a mile” when they hear about the intricacies involved in funding a movie.