Bill seeks 5-year tax break for local film industry

MANILA, Philippines - A partylist lawmaker filed a bill in Congress seeking a five year tax-holiday for the local film industry to help it recover and compete internationally.

Buhay partylist Rep. Jose Atienza Jr. said his House Bill 3840 seeks to amend Republic Act 9167, or  "An Act Creating the Film Development Council of the Philippines," to provide a tax holiday to the local movie industry.

Atienza said the country's film industry is dying, citing that it used to produce an average of 300 films a year, which dropped to less than 50 films a year.

"The film industry used to be one of the fastest growing industries in the country and in the world as well. We used to be recognized in the world in terms of creativity, originality and talent in our movies. The industry is moribund," Atienza said.

To date, only a few local films make a profit as many Filipinos are more aware of foreign films than the local ones especially because the Internet age has allowed the download of the newest foreign movies in people's computers and let the local movies run dry in the local movie houses, he added.

"We can easily compete with Hollywood-produced films. We just need to help the local film industry right now in retracing its path to profitability and greatness," said Atienza.

HB 3840,  or the proposed "Philippine Film Industry Tax Holiday Act of 2014," now pending at the House committee on ways and means chaired by Marikina City Rep. Romero "Miro" Quimbo, provides that the importation of machinery and equipment, and accompanying spare parts directly related to the making of films shall be exempt to the extent of 100 percent of the customs duties and national internal revenue taxes payable.

It also provides that a domestic manufacturer of any of these articles enumerated shall be entitled to a tax credit equivalent to 100 percent of the national internal revenue taxes, customs duties and levies actually paid on the raw materials used in the manufacture of the article.

The purchaser of such article shall also be entitled to a tax credit of 100 percent of the value of the national internal revenue taxes and customs duties imposed under Section 104 of the Tariff and Customs Code of 1978.

The bill also states there shall be a 100 percent tax exemption on the rental of equipment, editing fees and marketing fees in relation to the production and needed post-production events for the promotion of the films.

The bill refers to a domestic manufacturer as: a citizen of the Philippines, a partnership or any other association organized under Philippine laws, with at least 60 percent of its capital owned and controlled by citizens of the Philippines; and a corporation or cooperative organized under Philippine laws with at least 60 percent of its capital stock outstanding and entitled to vote owned and held by citizens of the Philippines, and with at least 60 percent of the members of its Board of Directors being citizens of the Philippines.

The bill assigns the Film Development Council of the Philippines and the Department of Finance to formulate the guidelines.