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France Mulls "Connected Devices Tax" For Cinema Industry

by Ulrika Lomas,, Brussels

15 January 2014

René Bonnell has finally presented his report on the financing of the cinema industry in France, advocating that the fiscal lever be applied to secure future resources, and recommending notably that a tax be imposed on Internet connected devices used for storing and reading cultural content.

At the beginning of 2013, Bonnell was tasked by the national cinema center (CNC) with examining ways in which to modernize financing, to ensure that financial support for the industry is adapted to the "digital revolution," which has completely changed how works are disseminated and consumed.

Bonnell advocated crucially that a 1 percent tax be levied on connected devices. Defending the idea, Bonnell argued that manufacturers and distributors would easily be able to "absorb" the fixed charge. Furthermore, Bonnell insisted that the tax would ensure a contribution from this sector, which ultimately prospers from content that it does not currently help to finance.

In his report, Bonnell underscored that the main problem of indirect taxation in the industry is the "heterogeneity" of the rates of value-added tax (VAT) applied. Bonnell pointed out that VAT rates currently range from 5.5 percent, imposed on the turnover of ticket sales, to the 20 percent rate levied on videos.

With the exception of the 5.5 percent rate of VAT imposed on ticket sale turnover, the rates of VAT applied merely "penalize" any dynamic pricing policy that would otherwise actually stimulate demand, enabling operators to contribute to supporting the industry, Bonnell noted. Moreover, the varying rates "handicap" national operators facing tough competition from foreign distributors and broadcasters, he stressed.

Concluding, Bonnell emphasized that the Government should preserve the strategic aim of reducing VAT rates as swiftly as possible. Authors' rights should also benefit from the 5.5 percent reduced rate of VAT, Bonnell maintained, pointing out that it is simply "paradoxical" that books and films should be subject to the reduced rate, while authors are subject to VAT at a rate of 10 percent.

TAGS: VAT rates | tax | value added tax (VAT) | mining | tax rates | France | tax breaks

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