On June 19, 2014, seven departments including the Ministry of
Finance, National Development and Reform Committee, People's
bank of China, State Administration of Radio Film and Television
jointly announced "The Notice of Economic Policies Supporting
the Development of Film Industry" ("Notice").
Comparing with earlier policies, the recent policies have provided
support in taxation, financing, and land use with full
consideration of each step along the movie production chain. The
main points of the "Notice" include:
One hundred million dollars to support boutique
movies: According to the "Notice", not only
would the government enhance the use and management of film related
funding, it will also increase the support towards boutique movies.
The Central Ministry of Finance will continue to arrange specific
funding for boutique movies to foster its production. Each year,
one hundred million dollars will be granted to support 5 to 10
influential movies which have passed individual reviews.
Support the application of high technologies with movie
production and development of high tech hubs. Arrange specific
funding for film development within the cultural sector with 5
elements: i. Develop the application for high technologies
within movie production. ii. Support Chinese film industry to go
abroad. iii, Support major film industry projects and high tech hub
development. iv. Fund major films with strong markets. v. Enhance
web development for movies with professional focus.
Fiscal policies to support the film industry.
It's difficult for film industry to obtain bank loans due to
its lack of physical assets. The Notice encouraged banking and
financial sector to develop new loan products for the film
industry. At the same time, "The Notice" will support the
banking and financial institutions according to development stages
and fiscal needs of the film industry. It will effectively connect
mortgage and loan business with clearing business, international
business and investment banking. It will also combine banking with
retail, asset management and middle businesses. It will encourage
banks, investment funds and insurance industry to provide multiple
financial platforms for the film industry.
"The Notice" did not mention the heated discussion
around "completion guarantee" as a popular financial tool
in Hollywood. Completion guarantee still has its obstacles in its
application in China. If it is possible to integrate insurance
business into film development policies and enable insurance
industry to become an effective pillar of the film industry, then
it will further foster the development of young directors and
Chinese film industry.
Preferential tax policies on the film
industry. From January 1, 2014 to the end of 2018, no
Value Added Tax shall be levied on the income generated from the
sale of film copies (including digital copies), the transfer of
copyrights, the distribution of films and the showing of films in
rural areas. The general tax payer who provides film projection
services could apply simplified method when calculating the Value
Added Tax according to the current policies.
Encouragement of the builds of cinemas.
Multiple methods including Land use policies have been applied in
encouraging the builds of cinemas.
The current policies took full consideration of all stages of
the film production chain from production to final showing. The
Korean government's success in protecting its domestic film
industry can be a good example for China. For instance, directors
have more freedom when producing the films since the film
censorship is replaced by film rating system. The Korean government
implements the Screen Quota system, demanding that cinemas and TV
stations should show or broadcast domestic films for at least
certain amounts of time. Finally, it is worth mentioning that
"The Notice" indicates it will enhance management and
seeks to resolve new issues promptly.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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