Tax competition between states of the US and provinces of Canada is hotting up in order to attract film production business, with the location for director M. Night Shyamalan's latest thriller 'Devil' hanging in the balance until recently.
Shyamalan lives near Philadelphia and has filmed 'The Sixth Sense', starring Bruce Willis, and seven of his other eight movies in Pennsylvania. While legislators in Harrisburg wrangle over whether there is space in their budget on an ongoing basis for film tax credits, 'Devil's' application for tax credits in Philadelphia has been withdrawn.
Shyamalan has told the Philadelphia Inquirer that production of 'Devil' will be moved from Philadelphia to Toronto because in Pennsylvania, the film tax credit is in doubt.
Last month, Ontario moved to match Quebec's recent tax moves in the area of incentives for filmmakers, and announced its decision to allow film producers a 25% tax break not only on labour costs, as was the previously case, but also on all production expenses.
Ontario's Finance Minister, Dwight Duncan, announced that the province would match the beneficial terms for its CAD80m tax credits to stop productions from moving to Quebec. The Ontario Production Services Tax Credit was expanded to incorporate all qualifying production costs incurred in Ontario, including qualifying labour costs as well as the purchase or rental of qualifying tangible properties, such as equipment and studio rentals.
The 2009 Ontario Budget also announced a CAD10m pilot program that would refund a portion of the costs associated with intellectual property development to Ontario companies in the screen-based industries.
Ontario has additionally invested heavily in infrastructure for the film industry, most recently sinking CAD10m into the Toronto International Film Festival's Bell Lightbox Centre , which will offer year-round programming for Ontario residents and tourists to learn, celebrate and experience film.
In June this year the Ontario government agreed to invest CAD20.5m in the Starz Animation Toronto 3D cartoon studio during the next five years, to create and retain high-tech jobs locally. Ontario also convinced French interactive game maker Ubisoft to open its fourth Canadian development studio in Toronto, with a CAD263m investment planned to create 800 jobs over 10 years.
The promoters of film production in British Columbia, Quebec, Louisiana, New Mexico and Georgia are no doubt examining all this activity to determine their next step.
A comprehensive report in our Intelligence Report series examining tax-sheltering arrangements for investors, including Venture Capital, Forest Finance and Film Finance in a number of key jurisdictions, 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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