Thanks to the Film Industry Law
Almost 40 years ago, director Francis Ford Coppola went to the Dominican Republic to film the memorable Cuba scenes for “The Godfather: Part II”. As hospitable as the country was to the director, his crew and the actors at that time, things have gotten even better.
The film industry in the Dominican Republic has substantially expanded since then, in large measure because the country has different and diverse natural scenery, from beaches to mountains, and buildings that were constructed in colonial times as well as more recently. Costs to film and produce movies are lower in the Dominican Republic than in many other places, too.
But one of the major reasons for the film industry’s explosive growth has been the Dominican government’s interest in supporting it – in particular, the country’s recent adoption of a law to promote and encourage the industry.
One of the goals of the Dominican Republic’s new Film Industry Law was to modify the country’s tax system so that it stimulates the film industry and encourages domestic and foreign investment in the industry. Toward that end, the Film Industry Law contains a number of tax incentives for the film industry itself, and for domestic and foreign investment in the industry.
For one thing, investors in Dominican feature film projects approved by the newly created General Directorate of Films may deduct 100 percent of their investment for purposes of calculating their income tax for the period in which the investment is made, subject to a cap of 25 percent of the income tax otherwise payable.
Another income tax benefit is available for producers and distributors of films in the Dominican Republic. This tax benefit provides that income that is capitalized or reserved for new films or investments in films is completely exempt from income tax. In addition, income earned by individuals or businesses domiciled in the Dominican Republic for providing technical services for all films that are shot in the country are exempt from income tax.
Moreover, all foreign films produced in the Dominican Republic are exempt from paying the value-added tax applicable to the transfer and importation of most goods and services. Foreign films also are essentially exempt from all other municipal taxes with respect to filming, film equipment, and general production, except for taxes relating to the National Film Information Registry.
The new Dominican Republic Film Industry Law also provides that any individual or business that establishes a film studio in the country is entitled to a complete income tax exemption for income earned by the studio for 15 years from the law’s effective date. Additionally, the new law provides that capital goods may be imported duty free for a decade from the law’s effective date.
These film industry tax incentives are available to any individual or companies that administer, promote, or develop films and other audiovisual works that meet the following minimum requirements:
- Obtain a filming permit, which is issued at no cost by the General Directorate of Films for a period of 10 years;
- Have an insurance policy covering civil liability in case of damages caused to third parties;
- Spend 20 percent of the amount budgeted for the motion picture or other audiovisual work to be developed in the Dominican Republic, or have a budget consisting of at least 20 percent of Dominican capital; and
- Have a minimum participation of Dominicans, although that requirement can be reduced by the General Directorate of Films if the country cannot meet the demand for personnel with the necessary training.
The law also provides that funds that are generated by taxes on film-related goods and services are to be channeled back to the film industry.
Dominican Republic Live, from Metrocorpcounsel, 19.04.12, 4.35pm