TAX relief for investment in the film industry has been retained for a further three years, though the amount of an investment that can be offset has been reduced from 100 per cent to 80 per cent.
The decision to retain Section 35 film tax relief, due to expire in April, was welcomed by the industry. Mr Tommy McCabe, director of the Audiovisual Production Federation, said the high level of activity in the Irish film industry could continue.
Section 35 allows investors in film productions made in Ireland to deduct the cost of their investment from their taxable income. "Given the risky nature of film investments, such an incentive is necessary if investment is to take place," said Mr McCabe. However, he was disappointed to see restrictions in the tax relief down to 80 per cent of investment.
Other measures announced by Mr Quinn under Section 35 relief are clearly designed to aid indigenous production. Mr Quinn has left the annual investment limit for individual investors at £25 000 but has increased the corporate level to £2 million. He has also reduced from three years to one the holding period for the investment in film for capital gains tax purposes.
Section 35 has been the driving force behind the Irish film industry. Since it was amended two years ago, 35 per cent of all funding and 84 per cent of Irish funding for films came from Section 35 relief.
The decision to retain the Section followed a review of its workings by Indecon Economic Consultants. Its report noted the increase in film production since 1993, which it attributed to it.
Mr Quinn's measures include full retention of Section 35 in respect of 60 per cent of the cost of projects under £4 million to target those projects which offer higher employment potential and greater spending on Irish goods and services. The rest of the funding has to come from other sources.
Mr Quinn has also allowed for the retention of the incentive to attract higher budget films to Ireland to increase the skills of the Irish labour force and to reduce the cost to the Exchequer by reducing the amount of relief that can be raised for films with a budget over £4 million and by increasing the investor pool. Investors can dispose of their shares at the end of one year instead of three.
The Minister for Arts, Culture and the Gaeltacht, Mr Higgins, said progress could be made towards achieving a self sustaining level of film and television production which would serve to "greatly enhance our national culture".