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Tax incentive laws (Federal, States, Cities) National Film Industry Funds (Funcines) Audiovisual Sector Fund (FSA) Inovation Fund Direct support through the funding of ANCINE and the Ministry of Culture (Public Selections) Procult BNDES

TAX INCENTIVES Private and State-owned companies established in Brazil, as well as individual taxpayers, are allowed to invest part of their income tax obligations in the production of Brazilian films. Tax incentives can also be invested in independent TV productions; film development and distribution; technical infra-structure; film theaters; and film festivals.

To qualify, the companies responsible for the projects must apply to ANCINE on each specific project. If the application is approved, ANCINE will follow up the project and ensure that the money allocated through tax incentives is spent properly.

Federal Law 8685/1993 (Audiovisual Act)

Articles 1 and 1-A Income tax payable by individuals and corporations are entitled to tax deduction if an amount is invested in film or television production. Article 1 Tax-payers can acquire an equity participation in independent Brazilian films through the acquisition of securities issued by financial institutions (brokers), up to 3% (6% in the case of individuals) of their income tax. Article 1-A Tax-payers are not entitled to acquire equity participation under this scheme, which is basically a sponsorship mechanism.

Audiovisual Act - 8.685/93 - Art. 3

Remittance of profits abroad coming from then exhibition and exploitation of foreign audiovisual works in Brazil are subject to withholding tax at rates of 15% (TV programs) or 25% (feature films).

Article 3 Article 3 allows distribution companies (US majors included) to obtain a 70% tax deduction if they invest the equivalent amount in the production of independent Brazilian feature films, TV films or series.

Main Investors of Art. 3 (2009) DISNEY (17,8%) FOX (17,4%) UNIVERSAL (15,0%) PARAMOUNT (9,8%) SONY/COLUMBIA (8,9%) FREEWAY ENTERTAINMENT (8,8%) WARNER (7,6%)

Audiovisual Act - 8.685/93 - Art. 3-A

Article 3-A Article 3-A mechanism benefits TV broadcasters, which can get a 70% deduction on withholding taxes due on remittances abroad related to the broadcasting or narrowcasting of foreign audiovisual works and events in Brazil. Taxpayers are allowed to invest an equivalent amount in the co-production of independent Brazilian feature films, documentaries, TV films and series.

Audiovisual Federal Law 2.228/01 - Art. 39

CONDECINE (Contribution for the Development of the National Film Industry) is a tax charged on remittances abroad of profits stemming from the exhibition and exploitation of audiovisual works, at a rate of 11%. Under Article 39, International TV Programmers are exempt from paying the 11% Condecine tax, provided that they invest 3% of the amounts remitted in the co-production of independent Brazilian films, TV films, series and educational and cultural television programs.

WEIGHT OF EACH TAX INCENTIVE (Jan/2005 - Jun/2010) Art.1 Law 8.685/93 (29,7%) Art.3 Law 8.685/93 (25,8%) Art.1-A Law 8.685/93 (19,1%) Law 8.313/91 (13,3%) Art. 39 MP 2.228/01 (9,3%) FUNCINES (2,0%) Art. 3-A Lei 8.685/93 (0,9%) Source: ANCINE

FUNDS National Film Industry Funds (Funcines) Private Audiovisual Sector Fund (FSA) - Public

National Film Industry Funds - (FUNCINES)

National Film Industry Funds (FUNCINES) are private closed funds managed by Brazilian financial institutions which are accredited by the Federal Central Bank. 100% of the amount invested in the acquisition of quotas can be deducted from taxable income. The establishment of FUNCINES must be approved by CVM (the Brazilian Securities Commission, similar to the Securities and Exchange Commission in the US) . FUNCINES financial policies and selected projects must be previously approved by ANCINE. Projects can be accepted in the areas of production, distribution, exhibition, and infrastructure, as well as shareholding participation in audiovisual companies.

National Film Industry Funds - (FUNCINES)


Audiovisual Sector Fund (FSA)

FSA was developed in 2008 to provide financial assistance to projects, and aimed at developing the Brazilian audiovisual industry. Audiovisual Funds resources come mainly from the Contribution from the Development of a National Film Industry (CONDECINE), a tax applied to the broadcasting, production, licensing and distribution of film and video works for commercial purposes.

Sector Funds Financial Support

Investment: participation in projects and companies future revenue flows Financing: reimbursable loans to projects Equalization on financial charges: total or partial subsidy on interest rates payable and other financial charges on financing operations Non-reimbursable support: non-reimbursable financial support for specific purposes

Sector Fund Future Perspectives

Priority areas being considered for future financial support by the Management Committee: development of audiovisual projects, (specialization in script writing and film business plans) professional training programs international co-productions

The Automatic Support by Ancine

This program awards funds to production, distribution and film exhibition companies involved in financially and artistically successful Brazilian films ANCINE provides two automatic funding mechanisms: the Box Office Prize and the Quality Incentive Program


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