Commercial filming incentives - global update

Countries that are introducing a new film and TV incentive, for example, may decide to include commercials if they want to distinguish themselves from rivals.

It’s also possible that a commercial incentive may encourage a producer or director who works across genres to come to your country to shoot a commercial and then return at a later date with a bigger project. Or they may go home and evangelise on your behalf.

Countries that face challenges attracting films and TV dramas may see commercials as an attractive alternative. The talent base in brand-based communications is superb and able to pass on its expertise to local partners. Nations that are able to get their volume of commercial production up into the hundreds a year certainly wouldn’t regret doing so.

Major film and TV production hubs like western Europe, New Zealand, South Africa and Canada do not offer filming incentives for ad campaigns. But with an increased trend towards branded/digital content and advertiser-funded programming, producers may find it worthwhile talking to film commissions in these regions to see if their project is eligible for an incentive under a different category heading (one person’s ‘commercial’ may be another’s ‘digital film’).

The US

America has everything you need to make great TV commercials, such as diverse locations, technical talent, state-of-the-art equipment and cutting edge post-production and graphics companies. So it’s no surprise that the vast majority of US commercials are shot at home, according to the Association of Independent Commercials Producers.

Where incentives come into play is in encouraging commercials producers to switch from one state to another. One of the most high-profile programmes is in New York State which has been pursuing production work aggressively in recent years.

The New York State Commercial Tax Credit Programme provides credits of up to $7m a year. The money supports shooting commercials downstate, upstate and those demonstrating incremental growth in production, and the support has now been extended by several years.

Another state that offers incentives to commercial producers is Louisiana – subject to a minimum spend of $300,000 a year. It’s a similar situation in Georgia, which says that “televised commercial productions qualify for the 20% income tax credit if qualified expenditures by a single production company on one or more projects reach at least $500,000 in a single tax year.”

A key consideration for producers is the minimum spend threshold that triggers tax credit payments. Illinois, for example, requires just $50,000 in minimum spend on projects less than 30 minutes long, while Kentucky has set the bar for commercials at just $100,000. Other states with commercial incentives include Colorado ($250,000 minimum local spend and half the workforce must be Colorado residents) and Hawaii ($200,000 minimum). There are also incentives in Arkansas, Minnesota, Mississippi New Mexico, North Carolina, Oklahoma, Pennsylvania, Tennessee and Texas.

One factor to keep in mind is that some states operate their funds on a first come, first served basis, so the earlier you put in an application for support the better. Also watch out for project caps. North Carolina’s 25% rebate has both a minimum spend and per-project cap of $250,000.

Eastern Europe and central Asia: limited commercial incentives

The Czech Republic, Hungary and Croatia have attractive tax credit systems but these don’t extend to TV commercials. This is also true for Estonia and Latvia’s incentives – but there are some signs that this situation is shifting a little in Eastern Europe.

Serbia’s 20% incentive, launched in April 2016, covers all manner of production formats including commercials - with a minimum local spend of €100,000. The former Soviet republic of Georgia has also included commercials in its new incentive (minimum spend US$150,000 with the requirement that the end result air in at least three countries outside Georgia). Also significant is the news that the Ukraine’s new 25% incentive (ratified in May 2017) will be available to commercials producers.

Romania said it was looking at a Czech/Hungary-style incentive in 2016, but as yet there has been no confirmation that this will actually happen. The industry is also waiting to see how Poland will frame its new incentive. In both cases, it will be interesting to see if they offer incentives to TVC producers.

There are parallels here with the US, with lots of locations in close proximity trying to establish an edge over each other. It might make sense for more of these countries to offer incentives to producers that spend a minimum amount per year on TV commercials.

Asia-Pacific: Malaysia incentives

Malaysia wants to position itself as the regional filming hub and offers a 30% tax rebate for a broad range of production including TV commercials.

The level of investment required by commercials producers is not specified, so should be discussed with the Film In Malaysia Office (FIMO). More details can be found at www.filminmalaysia.com. Malaysia’s main regional competition comes from Singapore, which has attractive support mechanisms for film but not commercials.

Cambodia is popular with filmmakers but has no sector incentives. However, the Cambodia Film Commission says it “offers comprehensive free services to all kinds of productions (feature films, commercials, TV programs, documentaries...).”

Middle East: Abu Dhabi incentives

Twofour54, Abu Dhabi’s media and creative industries hub, and the Abu Dhabi Film Commission (part of twofour54), run the Middle East’s most attractive incentive scheme.

The incentive, in the form of a rebate of up to 30% of qualifying spend in the Emirate of Abu Dhabi, is available for feature films, TV, documentary, advertising and music video production. The fact that advertising is covered by the incentive is an indicator that Abu Dhabi would like to win work from Dubai, which has a longer track record in commercial production but offers no formal incentives.

“Well aware that costs play an important role in production decision making, the Dubai Film and TV Commission is always available to discuss ways to reduce the cost of filming in Dubai and to provide financial incentives, whether through special arrangement with key industry partners, licensing and fee rebates, or negotiations with service providers,” says Film Dubai.

Israel has an incentive programme that is focused on film and TV, but not commercials. However, once again it’s worth talking to players at a regional level.

The Jerusalem Film and Television Fund offers financial incentives for film and TV projects that promote the city in a positive light, but may also be able to advise on the potential for commercial support as well.

Latin America and the Caribbean: limited incentives

Chile has just introduced a new 25%-30% tax incentive. Initial reading of this makes it look like commercials are not covered, with a minimum spend of US$2m required to trigger the incentive. This is despite the fact that Chile is a popular market among commercial producers.

Mexico may be a market worth approaching via the Mexican Film Commission (MFC). The country does attract several commercials each year and has an incentive package that is theoretically applicable to commercials.

“The fiscal incentive for foreign productions known as VAT 0% works similar to a rebate and you could get a 10-12% tax return from your total expenditure in Mexico,” says the MFC.

“The financial incentive known as ProAV is a cash rebate of up to 7.5% of the total Mexican spend. If combined, any given production could get back up to 17.5% of their total spend in Mexico (with a valid fiscal receipt).”

The MFC says both incentives are available for all types of audiovisual productions, but ProAV is only available for projects with a minimum spend in Mexico of US$3.5m for pre-production and filming.

Places definitely worth checking out include Puerto Rico and Trinidad & Tobago – both of which have incentive schemes (35-40%) that cover commercial productions. Minimum spend for both is $100,000.

Other international considerations

Fiji offers a 47% cash rebate for commercial production, while Mauritius has an attractive 30% incentive for ads with a low minimum spend of $30,000.

Camera image: FreeImages.com/Patita_Rds. Statue of Liberty: FreeImages.com/Createsima. Kuala Lumpur image: iStock.com/neoellis. UAE image: iStock.com/anzeletti