A Department of Trade & Industry (DTI) incentive that is expected to encourage the production of foreign and domestic large budget film and television projects in South Africa, was launched yesterday in Johannesburg, at an event that included representatives from the DTI, the Department of Communications, the South African Revenue Services, the Industrial Development Corporation (IDC), the National Film and Video Foundation (NFVF), the Gauteng Film Commission, the Durban Film Office and various production companies.

The incentive is known as the Large Budget Film and Television Production Rebate and will allow an eligible applicant to be rebated for a sum totalling 15% for foreign productions or 25% for South African productions or official coproductions of qualifying South African production expenditure (QSAPE).

A finite sum of R252-million has been allocated over an initial three-year period for this.

Simply put, if a production company spends R25-million or more in South Africa to make a film, it qualifies for a tax rebate of a maximum of R10-million.

The eligible formats are feature films, telemovies, television series or miniseries, animation and documentary programmes.

The production content does not have to be of the local South African variety.

Speaking at the event, the Minister of the DTI, Mandisi Mpahlwa, said South Africa has a world-class physical and legal infrastructure, which is critical for the film industry and there are many possibilities for productions that the country could convert into something marketable.

The incentive is a culmination of ten months’ work after the film industry was identified as a key sector for South Africa’s economic development.

The package launched by the DTI consists of support measures covering production cost, training and an internship programme, and export marketing support.

The skills-development component of the incentive package aims to remedy the intermediate and advanced skills shortages, focusing on short intensive courses over periods no longer than two weeks.

“I believe that everything we try to do as South Africans, human resource development must always be the anchor of that which we are trying to build,” Mpahlwa said.

The total value of South Africa’s film industry is R7,7-billion of which local production accounts for only R1,4-billion.

The offset’s eligibility requirements are designed to increase benefits for the South African film industry including the development of South African projects with ‘high-end‘ production values.

For a company to be eligible for the offset, it must be a South African resident company or non-South African resident company with a South African business registration that is operating with a permanent establishment in South Africa – both when it lodges the income tax return and when the rebate is due to be credited.

A production company can apply for an interim certificate stating that if the film meets the criteria of the incentive it will be given a tax rebate. Once the film is complete and ready for distribution, the production company must, within three months, submit its application to the panel or technical committee that will ensure the film meets the requirements, after which a final certificate will be issued.

This stage of the process will take approximately six weeks, after which it will take three to four weeks for the money to be paid back to the production company.

Director-general of the DTI Dr Alistair Ruiters said the incentive has been finalised.

“We have set out the guidelines and made application forms available. The DTI is immediately open for business,” he said.

The launch of the Film and Television Production Rebate complements existing support measures to the industry, such as the Income Tax Act, No 58 of 1962 under section 24F, which enables investment into individual film productions by local high-net-worth individuals.

Section 24F, IDC and NFVF funding can all occur in conjunction with the rebate.

“In establishing the offset, the DTI recognises the economic employment and skills development opportunities large budget film productions provide for South Africans working in the film industry,” Mpahlwa said.

“The offset is designed to ensure that South Africa becomes competitive in attracting, among other things, large-budget films, thereby increasing the number of films produced in the country under coproduction treaties and providing increased opportunities for South African casts, crew, postproduction companies and other service providers linked to the film industry.

“If successful, this incentive should lead to the development of local-content films with international appeal, thus ensuring a sustainable film industry,” he concluded.

All existing censorship regulations will still apply.