Production Incentives Update: December 2022
Heading into the new year, film incentive programs are changing across the US, Canada, and Czech Republic. In this post, we'll outline key details so you can maximize your production budget in 2023.
As noted in EP’s last Newsletter US Production Incentives Special Alert: Hawaii, Hawaii enacted a requirement starting January 1, 2023 for Hawaii Film Tax Credit Act applicants to withhold and remit Hawaii general excise tax (HI GET) from all loan-out company payments for Hawaii work activity on the participating project. Based on an Information Briefing Session held on December 14, 2022, the State announced new rules and procedures for reporting and paying loan-out HI GET withholding, please review the Hawaii Production Tax Incentives Notice.
IMPORTANT: A production company’s failure to make timely and accurate loan-out HI GET remittances risks forfeiture of the production company’s entire Hawaii film tax credit, not just the portion of the missed or incorrect loan-out HI GET withholding. Additionally, the participating production company is subject to a tax penalty equaling 100% of the entire GET withholding tax for failure to pay and report the full amount.
In 2023 productions applying for Minnesota's Film Production Tax Credit will be eligible for more credit than previously offered because the compensation cap for above-the-line wages is increasing from $100k to $500k. Individuals that hold more than one position are only eligible once.
Minnesota offers a 25% transferable tax credit on qualified productions that spend at least $1M. Minnesota also offers a rebate of up to 25% on eligible production expenditures.
Starting on January 1, 2023, applicants to the New York State Film Production tax credit program will be required to submit a Diversity Plan with the Initial Application. The Diversity Plan will outline specific goals and strategies the production will undertake to hire a diverse workforce. The plan will also indicate whether the applicant will participate in training, education, and recruitment programs. Employee and Vendor Tracking Sheets are available in addition to other tools used by production to collect diversity data; the forms are for internal use only and are not required to be submitted. Performance against the production’s original goals will be evaluated during the Final Application review.
The applicant will submit a diversity report with the final application, demonstrating whether the production met the Diversity Plan's goals. Productions who do not meet their goals must show a good faith effort was made by providing additional supporting materials, such as copies of published notices and emails regarding hiring attempts. Workforce Utilization Report and Diverse Vendor Report are required to be submitted by the applicant. The Diversity Plan and report must be submitted by applicants for the Film Production tax credit only and are not a requirement of the Post-production tax credit.
New York offers qualified productions a 25%-35% Refundable Tax Credit.
Ontario will be expanding the eligibility of location fees under the Ontario Production Services Tax Credit regulations. Effective for expenditures incurred after November 14, 2022, the definition of "eligible tangible property expenditures" will include all location fees, including those paid to restaurants, homeowners, stores, etc., rather than being limited to those locations that are in the regular business of leasing property of the type used on productions (e.g., soundstages, warehouses, production offices, etc.) Note: The maximum eligible amount for on-location filming that can be claimed for production will be limited to 5% of the production's qualifying spend.
The Ontario government will also introduce a mandatory on-screen acknowledgment for productions that begin principal photography after December 31, 2022.
The stop-gap measure signed by the president reinstated the previously suspended film tax scheme with the addition of a new per-project cap of CZK$150M (about $6M) per project, effective on January 2, 2023.
The Czech Republic currently offers a 20% tax rebate on qualified productions.
No matter where you're producing, Entertainment Partners can help you secure the best possible incentives for your project. Visit ep.com/production-incentives to learn more, or contact us at firstname.lastname@example.org.