Sanchia Temkin
By allowing production companies to deduct all production costs from taxable income if 75% or more of their costs are spent locally, the South African Revenue Service hopes to build on a taste for SA that has already seen in The Poseidon Adventure and US comedy Racing Stripes made here.
"The proposals are designed to motivate film makers to keep their money in SA," said Doelie Lessing, a director at Werksmans Tax.
If filmmakers did not meet the 75% requirement, they would be able to deduct tax only on costs spent in SA.
"They would not be able to claim any expenses incurred in shooting on location outside SA, such as the Kalahari," Lessing said.
Thabiso Masudubele, projects manager at the Gauteng Film Office, said the proposals would sustain the growth of the local film industry.
About R2bn a year flows into Western Cape, which has become a popular destination for international film productions. The city was the fifth-most popular location in the world last year.
SA’s tax laws were changed following flagrant abuses by the film industry in the 1980s. In one scam, individuals, usually wealthy ones, would buy the completed film from producers, benefit from the tax break and lease the distribution rights back to the producer.
The law currently makes provision for special deductions for film owners. These include a 100% deduction for production and post-production costs incurred in the year in which a film is completed. There is also a deduction for marketing expenditure for films that are exported, and one for print costs.
The new laws are expected to take effect on January 1 next year.
Publisher: Business Day
Source: Business Day
