FILM and music are two creative industries that have flourished in Jamaica. As we are presently celebrating Reggae Month, there seems to be no better time to highlight the provisions of the Motion Picture Industry (Encouragement) Act and the Entertainment Encouragement Bill. This bill is intended to repeal the Motion Picture Industry (Encouragement) Act for the primary purpose of extending the benefits presently enjoyed by the motion picture industry to the broader entertainment industry.

The aim of the Motion Picture Industry (Encouragement) Act, as the name suggests, is to support and promote the film industry in Jamaica. A “motion picture production” is defined in the act as including the making and producing of motion picture and television films, acoustical accompaniments, recordings and sound transcriptions of every kind.

Under the act, persons declared by order of the minister to be recognised motion picture producers are entitled to certain benefits and reliefs. This order will include such terms and conditions as the minister may think fit and will be conditional on the applicant undertaking to expend a specified amount of money in Jamaica on “local disbursement” for each production year. “Local disbursement” refers to money spent in Jamaica for the purchase of any article manufactured or produced in Jamaica or as salary or wages. The orders once granted will remain in force for a period not exceeding 15 years, but may on expiration be renewed. If, however, the motion picture producer fails in any production year to expend the specified sum on local disbursements or to comply with any other term or condition of the order, the minister may revoke the order.

The Benefits extended to recognised motion picture producers include:

— Free entry of plant and building materials

Recognised motion picture producers are entitled to import any plant, equipment, machinery and materials for the building of studios or for use in motion picture production free of taxes and duties. These concessions are granted on condition that he or she satisfies the Commissioner of Customs and Excise that —

(a) the articles are imported for the purpose of motion picture production; and

(b) the articles cannot be manufactured locally.

— Relief from customs duty, stamp duty and general consumption tax on local purchases

Where a recognised motion picture producer purchases any article in Jamaica which he would have been entitled to import free of duties and taxes, he is to be refunded:

(i) a sum equivalent to the customs duty, stamp duty and general consumption tax paid on the article when it was imported, as certified by the Commissioner of Customs and Excise; or

(ii) a reasonable sum having regard to all the circumstances, if the Commissioner of Customs and Excise certifies that he is satisfied that the relevant taxes were paid, but is not satisfied as to the amount.

— Relief from Income Tax

Recognised motion picture producers are entitled to relief from income tax in respect of the profits or gains earned in the business of motion picture production in Jamaica. This relief is applicable to each motion picture produced in Jamaica for a period of nine years from the date of its first release or exhibition.

Where a recognised motion picture producer incurs capital expenditure in the acquisition of motion picture facilities, an allowance equal to 70 per cent of such capital expenditure is given for the year of assessment in which the expenditure was incurred.

It is hoped that this 2005 bill, when passed, will broaden the scope of the Motion Picture Industry (Encouragement) Act so that persons involved in dance, music and drama productions will be able to benefit from the reliefs set out above. The Bill does so by replacing the “recognised motion picture producer” with an “entertainment producer”. An “entertainment producer” is defined as “a person who undertakes to produce motion pictures, dramatic works, dance, or music on a professional basis”.

Further, a “music production” is defined as —

(a) the operation of music studios, resort studios, entertainment complexes other facilities for recording or presenting acoustical performances, recordings and sound transcriptions;

(b) the provision of facilities for accessing, leasing, importing or otherwise acquiring equipment, supplies, rights or personnel for any purpose referred to in paragraph (a); and

(c) the marketing of any acoustic recordings and sound , transcriptions;

These definitions would allow quite a few members of the music industry to benefit from the various forms of tax relief contained in the existing act. The bill also, among other things:

–seeks to limit the maximum life time of each order to 10 years, after which the order may be renewed;

–specifically indentifies items that a recognised entertainment producer who is a musician may be entitled to import tax free;

–extends the period of income tax relief to a period of 10 years from the date of the first release of the entertainment production;

–establishes an Entertainment Advisory Board that will advise the Minister on all matters relating to the entertainment industry, identify opportunities for the development of Jamaica’s entertainment infrastructure and the advancement of Jamaica as a premier location for entertainment products and services and monitor the implementation of the entertainment industry policy.

Though we do not know when this bill will be passed, one can only hope that as other sectors decline and our entertainment industry struggles to grow, that this bill will soon come into force and perhaps be expanded to include further benefits and reliefs.

Simone Bowie is an associate in the Commercial Department of Myers Fletcher & Gordon and may be contacted at simone.bowie@mfg.com.jm. You may also view the Myers Fletcher & Gordon website at www.myersfletcher.com.