COLOMBIA at CANNES 2009 : A look at the new Film Law

Colombia's Film Law

Introduction

In 2003, Law 814 - also known as the Film Law -- was issued in Colombia, to ensure integral development in the sector and promote the entire film-related production chain: affecting creators, producers, distributors and exhibitors as well as conservation of audiovisual heritage, the formation and development of technologies, and other aspects. This document briefly summarizes the Law's two main financing mechanisms: tax incentives for investment and donations to Colombian film projects, and the Film Development Fund (FDC, in Spanish).

Tax Incentives for Investment in and Donations to Colombian Film Projects: The film Law created an income tax deduction for contributors in Colombia who donate to or invest in Colombian film projects. Qualifiers can deduct 125% of the amount invested or donated from their tax base (there is a 30% liquid income limit for donations). This seeks to promote financing of Colombian films by individuals and private enterprise and to favor both companies (in economic terms) and film producers, who will enjoy a new source of financing for their productions.

Individuals and private companies donating or investing funds in films must do so through a trust fund set up on behalf of the feature-length or short film project that must be approved through a Resolution of National Project Recognition issued by the Ministry of Culture's Film Office.

Persons or companies are free to decide which film project(s) they wish to support. Investors or donors receive a Certificate of Investment or Donation from the Ministry of Culture's Film Office for the fiscal year in which the investment or donation was made, regardless of their business, to be used as support of income tax deductions.

This mechanism has become an important incentive for cultural patronage over the past five years and has generated private sector investment in Colombian film productions. It should be noted that, according to current Colombian regulations, this benefit can also be applied to national films co-produced with foreign companies or individuals.

The Film Development Fund (FDC in Spanish) is a financing instrument that uses non-fiscal tax contributions legislated by the Film Law to ensure a way of returning resources generated by the film industry to the sector. A non-fiscal contribution is generated whenever a citizen pays to see a public screening of a film in Colombia.

The Fund finances - through non-reimbursable annual awards - different stages of Colombian film projects including script and project development, production, post-production, and promotion. It also funds training for producers and audiences, conservation of audiovisual archives and other activities.

Exhibitors contribute 8.5% of the net income generated by the screening of foreign films in Colombian theaters. Distributors also make a non-fiscal contribution of 8.5% of their net income from distributing foreign films to Colombian theaters. And producers of Colombian films pay the FDC 5% of their net income for screening Colombian films. Producers are not responsible for paying a percentage of their net income for sales or screening rights negotiations exclusively for screenings outside Colombian territory or for exclusive screenings in Colombia outside of theaters.

It is important to note the 6.25 percentage point reduction of the exhibitors' non-fiscal contribution when they screen Colombian short films in their theaters, as per Decree 352 of 2004.

FDC funds are allotted based on decisions by the National Film Arts and Culture Council (CNACC in Spanish), comprised of representatives from public and private sectors of the Colombian film industry and supervised by the Ministry of Culture. Proimagenes en Movimiento, a not-for-profit organization recognized throughout Colombia for its transparency and efficiency, is responsible for FDC administrative and contractual processes.

The FDC receives funds annually from contributions made by exhibitors, distributors and producers and distributes them in the following manner: 70% for film production and the remaining 30% for complementary activities aimed at promoting the Colombian film industry.

The following table summarizes distribution of FDC funds from 2004 through 2008:

Film Law Results: From the time the Film Law went into operation, the FDC has collected close to 2.5 million dollars annually (earmarked for the film industry) and over 13 million dollars since it was created in 2003. Of these 13 million, 10 million dollars were distributed among 354 projects to develop scripts, for production and post-production of feature-length films and to produce documentaries and short films. Several of the fiction and documentary feature-length and short films funded by the FDC were selected to participate in world-class international festivals of the highest artistic level.

Besides FDC funding of production, creators and producers of Colombian films can also seek private investors, offering income tax deductions created by the Film Law. Since 2003, investment or donation certificates attest to the more than 8 million dollars spent to finance 40 Colombian films, including 22 feature-length films already screened commercially in movie theaters around the country.

Thanks to this package of financial incentives for Colombian film production, the number of releases increased from 3 to 4 films per year during the 90s and to 13 releases in 2008. The number of spectators for these films has also increased from less than 5% of the total movie-going population before the Film Law went into effect, to over 10% in the last 4 years.

The Film Law Applied to International Co-Productions: Mechanisms created by the Film Law are also responsible for an increase in co-productions with Colombia, offering attractive incentives to foreign producers, financial funds and investors. Colombian law defines national co-productions as those with a minimum of 20% Colombian investment and a minimum of national artistic and technical talent, making foreign investment in projects with Colombian co-producers eligible for Film Law benefits more feasible.

Colombia is also a member of the Ibero-American Co-Production Agreement and participates in the Ibermedia Program that has provided over 2.5 million dollars in funding to educational, development, co-production and distribution projects. Since the time the program was created, 49 Colombian films have been co-produced with companies from countries including Mexico, Peru, Venezuela, Panama, Brazil and Spain.

Perspectives: the Colombian Film Commission Swings into Action: In 2007, the Colombian government approved CONPES 3462¹designed to promote the Colombian film industry and create instruments to strengthen and complement policies being developed for the film industry through the use of strategic foreign trade activities promoting our country as a choice for audiovisual projects. To this end, the Ministry of Culture's Film Office and Proimágenes en Movimiento head up the Colombian Film Commission whose goal is to promote the country internationally as an ideal location for producing audiovisual projects. It is hoped that the Film Commission will have a positive social and economic effect through the formation of industry professionals and technicians, the generation of new opportunities for employment, and the sale of goods and services associated with the Colombian film industry.

1 National Council on Economic and Social Policy document