JULY 30, 2013

NR # 3180

Corporate tax breaks for local arts and entertainment industries
The local movie and film industries will get a corporate tax break under a bill that also exempts venue operators or theater owners from paying amusement tax whenever they show locally produced films and music events featuring local artists. Rep. Alfredo Vargas III (5th District, Quezon City), a local film and TV personality and author of House Bill 1144, said the bill will encourage producers, filmmakers and entertainment professionals to venture deeper in the industry. Vargas said the local arts and entertainment industries in the country, has slowly been declining in terms of viewer statistics and income. “Hollywood films have surpassed its local counterparts in the mainstream movie industry. In fact, there would only be less than twenty films, which are of good quality and can be showcased internationally. Through the enactment of this bill, we can see the industry transform into something that is supportive of the needs of the people and is leaning on indigenous culture,” Vargas said. Vargas said it is noteworthy that movies and such art forms are tools in shaping public opinion. “These art forms affect the socio-economic and socio-political spheres of the society,” Vargas added. Under the proposed “Local Arts and Entertainment Industry Promotions Act,” any local producer of a film or movie utilizing all local staff may claim the total expenses incurred in the execution and showing of the film, provided that the claim for exemption shall be allowed as deductions from the company's gross income for the same taxable year. It further provides that the total amount of the claimed tax exemption shall be included in the company’s gross income or revenues and shall be subject to proper documentations and to the provisions on allowable deductions covered by Chapter 9 of the National Internal Revenue Code (NIRC), as amended. Likewise, the bill amends Section 140 of Republic Act 7160, otherwise known as the Local Government Code of 1991, provides that the imposition of the amusement tax shall not apply to locally produced films that feature a predominantly Filipino cast, that have been classified by the Movie and Television Review and Classification Board (MTRCB) as fit for commercial viewing. Furthermore, it provides that the holding of locally produced operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and

oratorical presentations including pop, rock or similar concerts featuring Filipino artists shall be exempt from the tax herein imposed. The measure will also amend Section 109 of Republic Act 8424, also known as the National Internal Revenue Code, as amended by Republic Act 9337, exempting from the VAT the importation of raw materials and equipment by persons engaged in the business of making films and other cinematographic work, producing music albums, theatrical plays, recitals and other similar artistic creations, for use in producing such, including but not limited to digital media, provided that the Bureau of Internal Revenue shall have the exclusive right to determine, after prior consultation with members of the film industry, the raw materials and equipment. The Movie and Television Review Classification Board (MTRCB) and the National Commission for Culture and the Arts, in consultation with two accredited performing arts organizations and one film producers’ organization and the BIR are directed to issue the necessary rules and regulations governing this Act. (30) lvc

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