BUSINESS NEWS

Removal of dti cap set to boost SA

Mon, 07 Nov 2011 11:22

The Department of Trade and Industry (the dti) recently announced that the cap on the film and television production incentive rebate for foreign, local and co-productions, previously set at R20m, has been removed.

Designed to encourage television and film productions to shoot in South Africa, the dti pays back 15% of Qualifying South African Production Expenditure (QSAPE) of R12m and above on foreign productions that shoot here.

For local and co-productions with a total production budget of R2.5m and above they rebate 35% of the first R6m of QSAPE and 25% of the QSAPE on amounts above R6m.

According to Rudi Siefert, deputy director in charge of film incentives at the dti, the rebate was previously paid only on QSAPE up to R20m. “Now if the budget comes to, for example R29m, we can rebate the whole amount. Now there is no cap at all on foreign, local or co-productions.”

He explained that the dti changes the guidelines from time to time according to the needs of the industry, and benchmarks what it does against international best practice.

“We’ve noticed that a couple of specifically foreign productions previously had bigger budgets and we’ve been able to pay only up to R20m, now as a result of lifting the cap we will attract more productions to South Africa. This will create jobs in the industry and money will be generated by production spend in South Africa. We see it as a tremendous boost for the local industry.”

According to Siefert the dti works very closely with organisations such as the Independent Producers Organisation and various film commissions.

“We’ve received very positive feedback from all of them. We’ve also heard from the industry that there are one or two foreign productions looking to film in South Africa, so there seems to be interest, but we haven’t received any new applications for funding yet.”

According to Rudi van As, general manager and financial director at Film Afrika (In My Country, The No1 Ladies Detective Agency), they are delighted that the dti removed the cap as it will open the way for more television series and larger budget films to come to South Africa.

“The uncapped SA cash rebate, combined with the highly skilled South African crew base, established infrastructure and fantastic locations, ensure that South Africa can compete as a filming destination in a highly competitive international environment.”

“The principal benefits are sustainable employment, skills transfer, continued investment in infrastructure and the further growth and development of the local film and television industry.”

Zaheer Goodman-Bhyat, producer at Light & Dark Films (Confessions of a Gambler, Skeem) comments: “What we know in the industry is that the dti incentive really does work on many levels. It is easily accessible and more importantly it returns positive cash flow to the fiscus, and so it is proving to be very valuable to the film industry and the people of South Africa in general.

“The primary benefit of removing the cap is that it incentivises bigger foreign productions to come to South Africa, and possibly more importantly, it incentivises them to spend more in the country. This is good for tax collection and good for tourism. It may prove to be good for suppliers to the film industry and crew too.

“On the local front, I support the move as it allows us to think bigger with our more ambitious projects, and it does simplify our finance plans on projects where we need international partners.”

Ross Garland, producer of Spud and U-Carmen eKhayelitsha notes that given the relatively small local film budgets across the board, the removal of the cap is unlikely to have any impact on those producers focused on making local content.

“I imagine the current growth in home grown content will continue on its positive trajectory regardless, fuelled as it was originally by the dti’s reduction in the threshold to R2.5 million. That said, this move might encourage some of the local content players to take on more ambitious projects in conjunction with international partners, as no doubt the cap elimination will be a significant boost for large inbound productions.”

Says Marlow De Mardt of DO Productions (Themba – A Boy called Hope, Lost City Raiders, The Ring of the Nibelungs): “I think it’s great news and shows how the dti has its finger on the pulse of trying to improve conditions for local filmmakers and making South Africa more attractive to foreign filmmakers. The removal of the cap is very welcome for the industry and it’s another very positive move from the dti. We’ve all been very appreciative of what the dti has done over the years for the industry through its incentives.”

Cape Film Commission CEO Denis Lillie calls the move a ‘significant step in the right direction’. He believes it has the potential to make South Africa a more attractive destination for larger foreign productions, especially from the US.

“While we currently also have an advantage because of the weakening rand, we would still prefer to see the rebate for foreign productions increased from 15% to 20 or 25%,” says Lillie.

“I think it’s going to be three or four months before we see the benefits or impact of the change. However, the potential to attract bigger productions highlights the need for us to have our film permit systems and locations sorted out. We are working with provincial government to start releasing more appropriate locations.”

SCREENAFRICA Print Magazine – November 2011 (view here)
By Linda Krige

« go back