The South African government recognises the potential of the film industry and believes that its growth could have a huge impact on economic development, in terms of employment and exports, while also stimulating supplier industries.
The Department of Trade and Industry’s (the dti’s) film and television production rebate programme was introduced on 30 June 2004, with the first applications having been received in September 2004. The objective of the rebate was to attract large foreign and local productions to South African shores. To date, the large budget production incentive programme has approved 49 productions, for a total rebate of R370 million. The projected expenditure for goods and services in South Africa, on successful completion of the projects is R2,4 billion, of which R1,5 billion would result in direct foreign expenditure.
Despite the rebate programme’s success, the dti recognised the need to put further measures in place to support the local film industry. The programme was thus terminated at the end of January 2008 and replaced with two audience-specific programmes, namely the South African film and television production and co-production, and foreign film and television production incentives.
Through the South African film and television production incentive, the dti has increased the financial support available for local productions, which is envisaged to encourage local content generation and further improve the location competitiveness of South Africa. More productions will result in the creation of direct employment opportunities, both in the production and supply of goods and services for international productions.
To date, the film and television production incentive programme has approved 81 productions for a total rebate of R387,5 million, comprising 44 South African productions, 12 co-productions and 25 foreign productions. The projected expenditure for the projects, upon their successful completion, is likely to fetch R2,3 billion, of which R1,2 billion would result in direct foreign expenditure.
Since inception of the local and foreign incentive programmes, the dti has supported various award-winning, as well as Hollywood Box Office successes, such as Tsotsi, Blood Diamond, Mr Bones, White Wedding, District 9 and Diamonds. District 9, the 2009 science fiction film that was shot in Soweto, with an over 90 percent South African crew and 100 percent local on-screen talent, has been hugely successful internationally.
With the production of films generally regarded as high risk, emerging small producers find it difficult to obtain the necessary funding. To assist local producers in improving their cash flow, the dti proposed the option of the incentive being paid according to the production milestones achieved.
The option of milestone payments is restricted to South African film and television productions and co-productions, and applicants wishing to make use of the this payment method must acquire a completion bond. As this might be costly for smaller producers, where the cost of a completion bond could be as much as R300 000, the following will apply:
* Seventy percent of the cost of the completion bond will be subsidised for productions between R2,5 and R6 million
* Fifty percent of the cost of the completion bond will be subsidised for productions between R6 and R10 million.
Productions over R10 million are normally required by financiers to have a completion bond in place, therefore no additional subsidy will be granted.
In the case of television episodes (including animation), payments can be made after the successful completion of each episode and delivered to the dti with an auditor’s statement confirming the Qualifying South African Production Expenditure (QSAPE). A completion bond will therefore not be necessary where payments are made after each episode.
Disbursements, according to milestones, will be implemented as follows:
Payment: 20 percent payment
Milestone: Confirmation of Completion Bond
Payment: 20 percent payment
Milestone: Start of Principal Photography
Payment: 20 percent payment
Milestone: Completion of Principal Photography
Payment: 20 percent payment
Milestone: Completion of the Final Mix (Post-Production)
Payment: 20 percent payment
Milestone: Submission of Form D – Claim Form
The above took effect on 1 October 2009 and will remain in place for a trial period of one year, hereafter the impact and success thereof will be assessed.
Media enquiries:
Sidwell Medupe
Tel: 012 394 1650
Cell: 073 522 6801
E-mail: MSMedupe@thedti.gov.za
Lillian Mofokeng
Cell: 082 888 8362
E-mail: lmofokeng@thedti.gov.za
Issued by: Department of Trade and Industry
22 October 2009
Source: Department of Trade and Industry (http://www.dti.gov.za/)
