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Film Tax Incentives

Film Tax Incentives. Operation of Hotel Tax Reduction. Hotel tax reduction is based upon total qualified production expenditures and total room nights. Ex: Qualified P roduction C ompany books 251 room nights and expends $300,000 on QPE: bill reflects a hotel tax of 6%.

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Film Tax Incentives

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  1. Film Tax Incentives

  2. Operation of Hotel Tax Reduction • Hotel tax reduction is based upon total qualified production expenditures and total room nights. • Ex: Qualified Production Company books 251 room nights and expends $300,000 on QPE: bill reflects a hotel tax of 6%. • Assume room rate of $200 per night for 251 nights. With out reduction QPC would pay $5,020.00 in hotel taxes on a $50,200.00 bill. With reduction – QPC pays $3,012.00, a savings of $2008.00

  3. Operation of Income Tax Credit • Amount of income tax credit is based upon local hiring. • Assume 25% of the total workforce utilized in the Territory are USVI residents; tax credit is equal to 15% of total amounts paid by QPC in withholding. • Ex: QPC pays $1,500,000 in withholding to the USVI. Credit is equal to $225,000.00

  4. Operation of Income Tax Credit • But QPC doesn’t have income tax obligation to the USVI – so credits must be transferable. • QPC sells tax credit to VI Buyer for $191,250.00 ($.85 cents on the dollar) • VI Buyer utilizes $225,000 tax credit against its income tax obligation to the USVI.

  5. Operation of QPE Rebate • Rebates are based upon qualified production expenditures in the USVI. • Assume QPC spends $1,000,000.00 on QPE. • QPC entitled to a rebate of $90,000.00.

  6. Case Study • In Louisiana, after the production incentive bill was passed in 2005, the industry grew from supporting 5,437 jobs and having $7.5 million in output in 2003 to supporting 18,882 and producing $343.8 million in output in 2005. • Similarly, according to comptroller Thomas DiNapoli, New York has seen a $7 billion influx into the state’s economy between 2004, when the incentives were instituted, and 2008. During that same period, the number of motion picture, video production, and post-production jobs also rose by 14.2%.

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