Canadian Provinces Engage In Tax Competition To Lure Back Film Makers

by Mike Godfrey, Tax-News.com, Washington

04 January 2005

Quebec is planning to almost double the tax credits offered to film production companies in an attempt to compete with other Canadian provinces and US states, where incentives have been increased to attract filmmakers.

In a news release last week, Quebec’s Finance Minister Yves Seguin announced that the refundable tax credit available to production services will be increased to 20% from the current 11%.

“This rapid intervention reflects the government's firm desire to maintain Quebec's position as an ideal film-shooting location for foreign producers,” Seguin’s statement explained.

The move by the Quebec government comes hot on the heels of an announcement by neighbouring Ontario that its Film and Television Tax Credit for domestic productions will increase to 30% from 20% and for foreign productions to 18% from 11%.

Canada, which has grown to become one of the world’s major centres for film and television production, has seen a marked decline in the amount of production money spent in recent years as tax competition from US states and other countries has lured movie makers elsewhere.

The weakening US dollar and new tax incentives in the recently enacted American Jobs Creation Act have also provided a reasons for American producers to stay in Hollywood.

According to reports, since hitting a peak of C$567 million (US$456.3 million) in 2001, spending by US production firms in Toronto had fallen to C$333 million by 2003.

Industry participants also report that 2004 was a depressing year for Montreal’s studios.

A comprehensive report in our Intelligence Report series describing tax-effective regimes for film production in a number of key countries is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp .

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