South Africa’s new tax laws are chasing Hollywood away: report

The Motion Picture Association of America (MPAA) has raised concerns that recent changes to South Africa’s tax incentive scheme and other regulatory proposals could stunt the development of the country’s film industry.

According to a report by Variety, under the new guidelines, productions that fail to meet certain benchmarks for supporting black-owned businesses are faced with the prospect of not receiving any cash rebate.

Worse still, their eligibility won’t be determined until after production wraps.

Speaking on behalf of the MPAA, spokesperson Marianne Grant said that the new tax rules created an untenable situation for any producer’s budget since they all need transparency and predictability before production can actually begin.

Variety reports that from 1 September, the South African Department of Trade and Industry (DTI) has begun mandating that a minimum of 20% of qualifying local spend on goods and services procured for foreign productions and co-productions goes to majority black-owned companies.

Productions that don’t meet this benchmark won’t receive any payment of the cash rebate. However, industry sources say that the DTI hasn’t offered enough clarity on exactly how those expenditures will be calculated.

That uncertainty could discourage foreign producers, said Grant.

“Film and television production is a high-risk business, and to manage this risk, we need a tax system with stable incentives to create sustainable jobs across all strata, and a copyright system that protects the sector, its creators and their work,” said Grant.

“The MPA has sought to work collaboratively to propose alternative measures which would achieve the same objectives without the current levels of risk.”

However, Grant also praised the DTI’s transformation efforts and added that MPA members have their own role to play in support of South Africa’s push for economic equality.

“We share the same objectives as the government and we believe that regulations can be introduced in a practical way and according to a realistic timetable, and with robust public consultation where that is still needed,” she said.

Variety notes that measures like the emerging black filmmakers incentive – which offers a 50% cash rebate to eligible productions – have been transformative for young black filmmakers, while the rebate more broadly has been an industry pillar during uncertain economic times – luring recent shoots like HBO’s Cinemax series ‘Warrior’ and Sony’s ‘The Dark Tower.’


Read: South Africans may dodge big tax increases for the first time in years

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South Africa’s new tax laws are chasing Hollywood away: report