Consultations with the B.C. film and television industry have led to proposed adjustments to the province’s film tax credit rates that provide certainty to the film industry while keeping the subsidy affordable for taxpayers, Finance Minister Michael de Jong announced today.
The government announced with Budget 2016 its intention to work with the film and television industry to address the rising cost of the province’s production services tax credit for film and television. “We are proud of the success we’ve seen in this industry, but we also need to safeguard the interests of B.C. taxpayers who ultimately pay for subsidies, and ensure there is equity with other industries that drive B.C.’s economy,” de Jong said. Under the current rates, the subsidy was forecast to cost nearly $500 million in 2015-16, up from an average of $313 million over the past three years, and an average of $182 million over the five years prior to 2012-13.
The Province announced in the February budget it would establish an industry-government working group with representatives from the film and television industry. These meetings helped the Province understand the industry’s perspectives and provided an opportunity to discuss potential options.
Subject to the approval of the legislature and the implementation of the necessary regulations, for principal photography beginning on or after Oct 1, 2016, the basic production services tax credit rate will be set at 28%, down from 33%, and the digital animation or visual effects (DAVE) tax credit rate will be set at 16%, down from 17.5%.
The Province is providing a transitional period to recognize the investments already planned for British Columbia. For example, the amendments will allow all episodes in one season of a television series to continue at the current tax credit rates if principal photography for the first episode begins prior to Oct 1, 2016.
The strong US dollar has helped make B.C. even more attractive to foreign film productions. Government will have the ability to make any future adjustments to the film tax credit rates by regulation, helping balance long-term competitiveness for industry and protection for taxpayers. Foreign film and television productions now comprise about 80% of all production spending in British Columbia. Between 2012-13 and 2014-15, industry spending on foreign and domestic productions that qualify for the production services tax credit increased by more than 50% to $2 billion.
Tax credits are only one of the factors considered by the film industry when selecting locations. British Columbia is a key location for film and television production in North America, and a growing hub for digital animation and visual effects, because of its talented workforce, world-class infrastructure, spectacular locations and proximity to Hollywood.
British Columbia has grown to become one of the world’s largest clusters for visual effects and digital animation companies, confirming our reputation as a global full-service production centre capable of performing the complete spectrum of services required for major productions.