In his new article, published in Portuguese on September 13th in the “Revista de Cinema”, Steve Solot, LATC President, highlights how the UK’s new independent cinema incentive, known as IFTC (“Independent Film Tax Credit”), designed to support local film production, could inspire similar models in Latin America.
The English version of the article is below.
Can the UK’s new incentive for independent cinema be replicated in Latin America?
By Steve Solot
What is the UK IFTC?
On March 6, British Chancellor Jeremy Hunt announced the long-awaited, new incentive for independent film in the UK, called the IFTC (Independent Film Tax Credit).
According to the IFTC, eligible films will be able to take advantage of a credit at a rate of 53% on their qualified expenses, which is equivalent to a 40% incentive, but which, in reality, is 32.5% after the corporate tax deduction.
Independent cinema, whether in the UK or in Latin American countries, is a segment of the industry that is characterized by the production of films that are not tied to major studios, TV networks, or traditional systems of financing, distribution and exhibition. This type of cinema is often made with smaller budgets and involves more creative freedom, as filmmakers are not necessarily bound by the commercial or aesthetic demands of major distributors or sponsors. Latin American independent cinema, for example, plays a crucial role in representing the cultural and social diversity of its countries, offering new perspectives and reflections on the reality of the region, as well as being a space for the emergence of new talent and artistic experimentation.
Why a specific incentive for independent films?
A new report from the British Film Institute (BFI) suggests that the overall boom in UK audiovisual production has had a negative impact on the independent sector, which has been unable to compete with bigger-budget domestic and international productions due to rising production costs, being unable to secure cast and crew, and ultimately reach audiences. After falling by 31% in 2022, spending on independent audiovisual production in the UK in 2023 is set to fall by a further 11%.
Now, the new IFTC aims to revert this trend. To be eligible for the IFTC, films will need to have production budgets (excluding marketing and distribution) of up to £15m, which is a level compatible with most independent feature films.
According to the new British Film Institute (BFI) test, films will also need to meet at least one of the following conditions: have a UK writer; a UK director; or be certified as an official UK co-production, as well as already meet the additional conditions: Certified as culturally British by the BFI; Made by a UK production company; and at least 10% of a production’s core expenditure must be used or consumed in the UK.
Also, the IFTC will not be available for TV programs. For a film to qualify for IFTC it must be intended for theatrical release.
Results are already being felt in the UK film industry.
Several films are already being greenlit or returning to the UK because of the IFTC. The first example is Rowan Athale’s boxing drama “Giant”, starring Amir El-Masry and Pierce Brosnan, which is moving from Malta back to the UK.
Local producers believe that the IFTC will have a significant impact in facilitating financing, especially for independent films in the £5-15 million ($6.5-19.6 million) budget range, such as “The King’s Speech”.
In addition, the incentive is available for co-productions, which is an important factor following the negative impact of Brexit on some international productions, as it will improve relations between the UK and other European countries.
Killing 4 birds with one stone
The IFTC is an ambitious and unprecedented initiative to promote independent cinema. It “kills four birds with one stone”:
- It offers strong support to low and medium-budget independent films.
- It contains a version of the well-known “European cultural test”, ensuring the inclusion of local talent and expenditure.
- It offers support to the exhibition sector, since the incentive requires a theatrical release.
- It acts as a national incentive that attracts international productions and co-productions.
Why is this new British incentive relevant for Latin American countries?
In many Latin American countries, there is a heated debate about the regulation of streaming services, as well as interest in creating a federal incentive for the production of audiovisual content (such as a “cash rebate” or transferable tax credit), which would bring considerable benefits to the domestic industry in the region. These important initiatives should also include specific measures to support independent production of feature films with small and medium budgets, such as the IFTC. This is a golden opportunity that cannot be missed.
