Article 39 of the Law for the Promotion of the Film Industry in the Dominican Republic constitutes a great incentive for foreign filmmakers and companies that wish to film their films in the country.
According to estimates by Juan Aguerrevere, CEO of Lantica Media, a company that offers services to the media, television and film industries that includes the Pinewood studio, this year they could enter the country 39 million dollars (two billion pesos) per concept of filming of various foreign productions. The amount would be contributed by the filming of films and series of the NBC, Turner, Entertainment Studios Television, Seesaw Film (speech of the King) and Netflix that will begin shooting next month.
Commenting on what happens with the legislation and how the country has benefited in that regard, Aguerrevere analyzed the benefits of the legislation.
“To talk about international cinema we have to give a framework of how the cinema is. Today in the box office market what people spend globally at the box office are 37 billion dollars. The entry of new players such as Netflix, Amazon Prime changed the business and it is expected that by 2022 watching movies on demand will reach those 37 billion dollars. So the cinema box office is still very important despite the fact that many people are heard talking about these platforms, ”he said.
The business expert of the film and television industry clarified, however, that in the film business 8 of 10 films leave losses, although it is very profitable for those who achieve large collections with a good film. “The films that have budgets of more than 100 million dollars, that is very particular. But the rest of the industry, which is about 4 thousand films a year that are made, 8 out of 10 give losses. ”
Aguerrevere made the point to detail the reason that motivates a producer to select a film destination to shoot a movie. “This is linked to the locations offered, to the script, which is what defines where it is going, because it is vital. This is what gold is worth. Then there are the financial incentives, ”he said.
The business scheme that moves the world industry is managed with an economic distribution of risk among producers. “A movie is financed approximately as follows. 60% is paid by distributors (those who are going to exploit the film in each country, who give money in advance) after 20% (more or less) that a capital can contribute and then come the states with their laws that put the additional ”
Netflix in RD
Of the 39 million dollars that would arrive in the country this year, 15 are from the agreement reached with the streaming content producer Netflix for the filming of a series of 10 chapters. It is the result of an arduous work of the entire Lantica Media work team.
“It is a job of more or less than two years because many people intervene in the whole process, from the location, creativity, financial. We have in the studio a team of people who follow up to 80 films that are in different stages in the production, a systematic work that works in a coordinated way. To this is added the marketing work that is done continuously, ”he explained.
Role of the State
“A State must encourage the film industry for two reasons. There is no way to make the movies profit if there is no government support. And a film in a very short period of time is an injection of foreign exchange and generation of jobs to the destination that goes, so that each of the cinematographic destinations fight for those films to go to those destinations. ”
Upon entering the details of the 25% incentive for foreign producers listed in article 39 of the Law for the promotion of limited cinema. “That amount is paid with a transferable tax credits, for companies that close their fiscal year in December, they have an opportunity to buy these tax credits to achieve savings in their income tax payment. That amount is negotiated with a discount, however it is necessary to note that the producer is only receiving 20% ”.
In reviewing the country’s competition with other nations that have greater benefits for international productions, the CEO of Lantica Media gave as an example the percentage given by the Fiji authorities in the South Pacific that is 47%, Puerto Rico that It has 40% cash, or 30% of Colombia, among others it is not so attractive.
“To give you an idea of how vital incentives are, in Hawaii, in 2017, it received 260 million dollars in production, with an impact on its economy of 390 million according to its analysis. In the case of Fiji Island, it received 125 million last year, having an impact of 350 million, Puerto Rico had an investment of 146 million and the impact of 225 million. As you can see, ours is not so attractive internationally, however they come for locations and infrastructure. We, for example, have Pinewood, first world studies. In that sense I can tell you about the companies that have first world teams, teams, professionals and other services that can be compared with those of other countries, ”he said.
Other benefits that the legislation has brought is the opportunity that many technicians have had to be certified thanks to article 34 of the same Law. “A group of Dominicans have been entered and now we have to attend the international market”.
Challenges
Although they are accompanied by the tax authorities for compliance with the provisions of the Cinema Law, he considered that there are still pitfalls that must be resolved regarding the deadline for the validation of tax certificates.
“The law says 90 days for prosecution, but we are out of those times. There is a titanic work of the people of the General Directorate of Cinema to enter the Law. It is the combination that begins to put in a breeding ground for a film to come to the Dominican Republic. ”
One of the tasks that should improve is the deadline for the closing of fiscal periods. “The presentation of income taxes requires that the certificates of article 34 come out on a very particular date. And the regulatory system of the DGII and DGCINE collapse two months before paying taxes and abandon the client, but there is already an awareness to divide internationals and locals, ”he said.
He defined as crucial the stage that the country is going through and estimated that based on the experience of foreign producers in what has to do with the whole process, will continue to conquer international markets.
“If DGCINE, General Directorate of Internal Taxes processes the files in due time and the certificate market collects them in the appropriate time, we as a country will be able to compete internationally, because it is a set of situations,” he said.
Perspective
Training, locations, infrastructure and of course the tax incentive are placing the country on the map as a destination for foreign film and television producers.
“The proximity, locations and infrastructure have been decisive. However, if something is missing in the Dominican Republic, it is a direct flight to Los Angeles, if the State encourages businessmen to take a direct flight there, that would give it a greater boost for the time it represents for producers and directors because when they have their rest they return to their houses, but the time is disorder with the scales ”.
He recalled that Lantica Media through the Cinematographic Training Center of the Caribbean, directed by Elías Muñoz, has contributed to the training, for which they have allocated approximately 2.4 million dollars. “A survey is made with the producers and directors and from there the trainings are prepared to certify the technicians.”
Last year, 70% of Lantica Media’s business was with national productions and the remaining 30% were foreign. Thanks to the Intersectoral Council for the Promotion of Cinematographic Activity in the Dominican Republic (CIPAC), the industry’s regulatory body, the General Directorate of Cinema and the General Directorate of Internal Taxes, the firm’s perspective is very positive, due to the improvements that have been made for the job.
“This year we will have 70% of the investment will come from abroad. The full capacity study should bring about 120 million dollars a year in foreign currency, that is if we are operating at capacity ”.
Improvements in the Law
Juan Aguerrevere considered that article 39 is a tool that the State has to attract foreign investments. “The attitude we should have is how to make it more competitive. Article 34 for example is to encourage local industry, there it changes because it is not to attract cash, but to develop an economic activity and makes the country the only one in the world that grants 100% of the cost of the film in incentive and that generates bad practices, which affects the one who makes proper use of the law, ”he said.
Aguerrevere defined as a great ally to the General Directorate of Internal Taxes, an institution with which I work hand in hand in the production processes.
Some that other theorists and laymen of the film promotion law have proposed that this be modified, while some argue that it should disappear because there are filmmakers who had unsuitable handling. “You have a job like José María Cabral’s, a movie Wonderful, flawless that does magic with the money they give you, but there are other movies that you wonder like this is using taxpayers’ money for this. There comes a controversy and the crossroads as a regulator. Those who propose to eliminate the law or article 34 is that they have not stopped to take account of the benefits that it has or article 39. The economic impact generated by 34 is superior to bad practices, what is necessary is to strengthen the rules, ”he said.
With the local cinema
Lantica Media will continue betting on the development of the Dominican film industry, however they are cautious when doing their business. They don’t work the local cinema thinking only of having a good box office.
“We are interested in films that have a production value because we use article 34 to make films that show the world what Dominicans are capable of. Our support for Dominican cinema is going in that direction, it is a talent issue, ”he said.