The Department of Economic Development and Commerce, through the Film Investment Fund, is looking to promote eight local production projects per year for the next two fiscal years, calling for an annual investment of $1 million a year, agency officials said.
Through the new Tax Incentives Code currently under review at the Legislature, the Puerto Rico Film Commission seeks to end the provision of tax credits as a form of incentive to cash contributions that can be quantified and tracked, Economic Development and Commerce Secretary Manuel Laboy explained.
“We’re proposing establishing incentives that will be granted annually, so that the sector will know how much money there is available for their projects and the government can track the return on investment,” he said.
Tax credits are “more difficult to manage fiscally, versus cash assigned to a project,” he said.
The way the Fund is structured, the government would deposit its share of the investment in a bank account under the production’s name, putting up the “first money in” to get the project going. Filmmakers will have a set term to procure the private investment for their projects, supported by the government’s cash allocations.
Filmmakers would then establish their final budgets and roll their films. They would then receive a cash advance through the Incentives Code based on their audited investment, as well as an advance from the Film Investment Fund. As a final step, filmmakers would report and deposit their revenues into the project’s bank account, where earnings would be split with the government.
The government’s Film Industry Development Program would receive 25 percent of all revenue, with the intention of redirecting them to other local film projects, Laboy said.
To qualify for Film Investment Fund benefits, production projects must meet two main goals: Maximize Puerto Rico’s exposition on an international level and they must be economically viable, Laboy said.
The Film Investment Fund will provide up to $125,000 or up to 25 percent of the project’s total budget, said Film Commissioner Pedro Rúa-Jovet. The money invested by the government will be unrestricted and may be used for development, distribution, promotion and marketing of the film.
The Film Investment Fund will feed from the fees and taxes paid by big-budget Hollywood productions that use Puerto Rico as a backdrop for their projects, Rúa-Jovet explained.
Furthermore, the Fund is also tapping into excess money generated through filing fees required by Law 27, which would be repealed and replaced by the new system on July 1, Rúa-Jovet said.
While the government is ready to fund 16 film projects in the next two fiscal years, the Film Commission has already received interest from a dozen local projects with a combined $11 million in total budgets and the potential to generate nearly 1,500 jobs, he said.