Hong Kong Urges Canadian Film Makers To Take Advantage Of CEPA Deal
by Mary Swire, Tax-News.com, Hong Kong
06 October 2004

Canadian film producers have been encouraged by the Hong Kong government to take advantage of the opportunities presented by the Closer Economic Partnership Arrangement (CEPA) with China by co-producing film projects in Hong Kong.

Speaking at a recent seminar during the 5th Calgary International Film Festival, Bassanio So, Director of the Hong Kong Economic & Trade Office (Canada) told delegates that Hong Kong has become one of the world’s largest film exporters after the US, India and Japan, and has captured a significant share in the film markets of Southeast Asia, Taiwan and South Korea.

"Many foreign studios use Hong Kong as a production co-ordination base for the Greater China region,” observed Mr So.

According to the Hong Kong official, the trade liberalisation under CEPA has opened up new opportunities for the film industry.

"Although CEPA is a free-trade agreement between Hong Kong and Mainland China, overseas companies, including Canadian companies, can benefit from it," he explained.

To benefit from CEPA, Canadian filmmakers can collaborate with their Hong Kong counterparts in joint ventures, to satisfy the requirement in the agreement that Hong Kong companies should have 75% of the copyright of the motion pictures produced.

Canadian firms can also inject capital to become a shareholder in an existing service supplier in Hong Kong in order to enjoy CEPA's preferential treatment.

The governments of the Hong Kong SAR and China recently agreed to expand the list of goods and services that receive preferential tariff treatment under CEPA.

As a result the mainland will apply zero tariffs to products under 713 mainland 2004 tariff codes, in additionto the 374 products that have been enjoying zero import tariff status since January 1, 2004.

Products under 529 of the tariff codes currently used by Hong Kong manufacturers will enjoy zero tariff status starting from January 1, 2005.

A comprehensive report in our tax shelters series describing tax-effective regimes for film production in a number of key countries is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop