Proposed tax changes to affect film industry
The South African Revenue Services (SARS) recently announced proposed amendments to taxation legislation applicable to the film industry. The Draft Taxation Laws Amendment Bill, 2009 and Draft Taxation Laws Second Amendment Bill, 2009 were published for public comment on June 1 2009.
In line with existing legislation film owners may utilise an upfront 100% deduction for eligible production and post-production film expenses. According to government, this has led to some abuse which continues to occur despite existing anti-avoidance measures. The allowance will therefore be further refined. In terms of the proposed amendments banks, financial services companies and insurers will be excluded from the definition of film owners next year.
According to a Business Day report the Independent Producers' Organisation (IPO) has objected to the proposed exclusion of banks, insurers and other financial service companies from film industry tax incentives, saying this will undermine the growth of an important industry. The IPO has stressed that this move might further dissuade private equity investors from investing in film projects - something they are already reluctant to do.