Gov. Luis Fortuño signed a new cinema-incentives law Friday aimed at taking Puerto Rico’s percolating film industry to the next level.
The governor had some serious star power shining during the bill-signing ceremony, which was attended by entertainment-industry power couple Jennifer López and Marc Anthony. The Puerto Rican singer-actors are reportedly looking to build a top-notch studio on the island, with potential sites including Dorado, Toa Baja and Fajardo.
“This is for you, so Puerto Rico can do it better in the realm of film,” Fortuño said to filmmakers and students at the College of Cinematography, Arts & Television in Bayamón.
The new Film Industry Economic Incentives Law improves on the current available incentives to increase the number of film projects produced in Puerto Rico.
The new law expands the definition of eligible projects to include documentaries, film shorts, music videos, video games and the filming of live shows, among others. It also increases the amount of the tax credit to 25% from 20% for related infrastructure projects, such as recording or transmission studies, subject to a minimum $5 million investment. Studio operators who qualify will get a special tax rate of between 4% and 10% on earnings, complete exemption on dividends, plus exemptions against municipal and property taxes.
Anthony and López were mum Friday on potential plans to build a state-of-the-art soundstage to attract more A-list movies and TV shows to the island.
Anthony praised the Fortuño administration for updating the film incentives law.
“Thank you for giving us the opportunity to bear witness and be counted on this historic day,” said Anthony, adding that all producers have their eyes on the island.
“We have always believed in the potential of Puerto Rico,” López said.
The legislation also creates the concept of “Film Development Zones,” which will provide incentives for the establishment of world-class film-production studios.
The law, which replaces one initially passed in 1999, establishes a system of tax decrees very similar to what the island government offers the industrial and manufacturing sectors.
In 2009, the film industry generated $118 million in economic activity. In 2010, 12 projects were filmed on the island, creating 17,528 jobs and 22,671 hotel nights. A dozen movies, TV series and documentaries shot in Puerto Rico last year pumped another $70 million into the island economy, according to Puerto Rico Film Commission Executive Director Mariella Pérez Serrano.
The new law requires film projects to pay the government 1% of production costs up to $250,000 that qualify for the incentives. The money deposited in the Film Industry Economic Incentives Fund will go toward managing the law, covering Film Commission expenses and helping spur the local film industry.
The tax credits slated to be awarded are the equivalent of 25% of the cost of an infrastructure project and 40% of the production costs as certified by an auditor. The incentives also include a 20% tax credit on the costs of hiring nonresident talent.
The tax credits are subject to a $50 million limit, which can be increased upon certain conditions, such as if the project is taking place in a film-development zone or the amount spent by a major studio in a film-development zone exceeds $200 million.
The film or infrastructure projects also will be given special tax treatment. For instance, a major-studio project, whose budget is $100 million, will pay taxes at a 4% rate, while the operator of a regular studio, whose budget for a project is $50 million, will be subject to taxes of 6% to 10%.
By CB Online Staff
Courtesy of http://www.caribbeanbusinesspr.com