The South African Government offers a package of incentives to promote its film production and post-production industry. The incentives consist of the Foreign Film and Television Production and Post-Production incentive to attract foreign-based film productions to shoot on location in South Africa and conduct post-production activities, and the South African Film and Television Production and Co-Production incentive, which aims to assist local film producers in In the past 10 years there have been major developments in the local film and video industry and the most notable ones, as listed by the respondents, are :

• The change in the threshold of the film and television incentive administered by the DTI widely known as “the rebate”
• The licensing of more broadcasters
• Availability of more funding sources,as well as ...
• The availability of more mobile, cheaper, yet good production equipment

Other developments reported on include the availability of more co-production treaties, the success recorded by more local films and the creation of representative bodies to advocate industry stakeholder issues.

The filmmakers explored the opportunities presented to them by the free to air and pay television to sell their content and the DVD medium was mostly used for the distribution of content. According to respondents the turnaround strategy from the public broadcaster (SABC), continued government support and the co-productions opportunities between SA productions companies and international companies presents endless opportunities. The licensing of new broadcasters will open room for more content and thereby expand the market. The ability to develop the industry to a competitive standard, the accessibility of audiences and technological development of the industry are some of the ways that will advance the South African film industry the production of local content.

DTI Incentives

The revised film production incentive intends to increase local content generation and improve location competitiveness for foreign film productions in South Africa. The new film and television production incentive comprises :

• Location Film and Television Production Scheme,
• The South African Film and Television Production and Co-Production Scheme

The incentives are intended to increase local content generation and improve location competitiveness for filming in South Africa.

Location Film and Television Production Incentive

The Location Film and Television Production scheme will replace the Large Budget Film and Television Production Rebate, which the DTI implemented in 2004.

This component is only available to foreign-owned productions with Qualifying South African Production Expenditure (QSAPE) of R12 million and above. It provides a rebate of 15 per cent of the QSAPE to qualifying productions in the following formats: feature films, telemovies, television drama series, documentaries, animation and short form animations. Its aim is to attract large-budget overseas film and television productions to South Africa.

South African Film and Television Production and Co-Production Scheme

The South African Film and Television Production Incentive is being introduced in order to provide more financial support for locally-owned productions and co-productions.

This component is available to both South African productions and official treaty co-productions with a total production budget of R2,5 million and above. It provides a rebate of 35 per cent for the first R6 million, and 25% for the remainder of the qualifying production expenditure. i.e. following formats are eligible: feature films, telemovies, television drama series, documentaries, animation and short form animations.

The value of the rebate for any qualifying production is uncapped. Effectively, the following key changes are being introduced:

• The reduction of the threshold from R25 million QSAPE for foreign-owned productions to R12 million
• A differential requirement that local-owned productions and co-productions must have at least R2,5 million of total production budget
• An increase of the rebate from 25% up to 35% for local productions in order to ensure higher financial support for local productions
• The reduction of the threshold will make the bundling of productions unnecessary for producers
• The provisions of the incentive will encourage production companies to advance industry transformation through adherence to the requirements of Broad-Based Black Economic Empowerment

Moreover, the incentive is structured in such a way that it will provide necessary impetus to the growth of the South African film and television production industry thus creating an environment conducive for South African producers to attract investment and develop stable output and sustainable production companies.

All productions currently approved in terms of the Large Budget Film and Television Production Rebate would still be treated under the rules of that scheme, and will not be able to convert to the new incentive. In addition to the financial support provided through the new rebate incentives, a number of other measures are being implemented as part of the broader sector development strategy. These include capacity development for emerging production companies, the development of writers and editors through the enterprise development programme and the establishment of five pilot programmes in different locations to address distribution infrastructure, local content and audience expansion.

Application forms and programme guidelines can be downloaded from the department of Trade and Industry on the following link: THE DTI FILMINCENTIVE

Contacts : For more information contact the Business Development Unit on:

• Tel: +27 12 394 9500 or +27 12 394 1261
• Website: www.thedti.gov.za
• Call Centre: +27861 843 384

Objectives:

To support the local film industry and to contribute towards employment opportunities in South Africa.

Benefits:

• The rebate is calculated as 35% of the first R6 millions of QSAPE and 25% of the QSAPE on amounts above R6 million.

Eligible Enterprises:

• Special Purpose Corporate Vehicles (SPCV) incorporated in the Republic of South Africa solely for the purpose of the production of the film or television project. The SPCV and parent company/companies must have a majority of South African shareholders of whom at least one shareholder must play an active role in the production and be accredited in that role
• An applicant must be the entity responsible for all activities involved in making the production in South Africa and must have access to full financial information for the whole production
• Only one film production, television drama or documentary series per entity is eligible for the incentive
• The following formats are eligible: feature films, tele-movies, television drama series, documentaries and animation
• The incentive is available only to qualifying South African productions with a total production budget of R2.5 million and above

The NFVF provides film and video-related funding in the broad categories of Education and Training; Development (of feature films, documentaries and TV Concepts); Production (of feature films and documentaries) and Marketing and Distribution.

Individuals, companies and organisations may submit funding applications to the NFVF in any of the above four funding categories. Specific conditions are applicable in each funding category, and it is important for applicants to take careful note of these conditions before submitting an application.

The NFVF will accept proposals for film funding throughout the year. In each category of funding, only one application per organisation, individual or company will be considered. Funding may take the form of a grant, investment or loan. In addition to financial assistance, support mechanisms will be made available once funding is approved. Funding allocation to selected projects will vary according to the specific cash flow needs of the project.

Criteria:

The NFVF Council makes the final decision on projects that qualify for funding as mandated by the NFVF Act. While each category of funding has its own specific criteria, the ultimate goal is to ensure that filmmakers from emerging to experienced benefit equitably from NFVF funding and programmes. Our role is to enhance the industrial capability of South Africa, and the rest of the continent, thereby boosting economic growth and industrial development. We do this by funding entrepreneurs starting new enterprises or supporting companies that want to extend existing operations.

We fund start-up and existing businesses up to a maximum of R1 billion and consider debt of R1 million. We also have a number of special schemes available, administered by our Development Funds Department.

Our role is to enhance the industrial capability of South Africa, and the rest of the continent, thereby boosting economic growth and industrial development. We do this by funding entrepreneurs starting new enterprises or supporting companies that want to extend existing operations.

We fund start-up and existing businesses up to a maximum of R1 billion and consider debt of R1 million. We also have a number of special schemes available, administered by our Development Funds Department.

Funding can be structured in a number of ways:

• Debt
• Equity and quasi-equity
• Guarantees
• Trade finance
• Venture capital

Minimum requirements:

• Security; the form and nature of which will relate to your specific circumstances
• Compliance with international environmental standards
• Shareholders/owners are expected to make some financial contribution - the contribution of historically disadvantaged people under special circumstances may be lowered, in which case the corporation will be prepared to extend finance in excess of the owner’s contribution
• The project/business must exhibit economic merit in terms of profitability and sustainability
• We do not refinance fixed assets, since our aim is to expand the industrial base
• We also focus on broad-based and expansionary black economic empowerment and black industrialists.

South African Revenue Service - The Film Tax Incentive/Allowance

The South African Revenue Service introduced Section 120 of the Income Tax Act in 2012, which provides for an incentive in the form of a tax allowance to stimulate film production. In order to qualify for the tax allowance, taxpayers must meet the following criteria:

• Income must be derived from a film
• The film must be approved as a local film or co-production
• Income must be allocable to the initial investors
• Income must be derived from exploitation of rights
• Income must fall within a 10 year period