Financial Incentives for the Audiovisual Industry Regulations,

L.N. 37 of 2008

MALTA FILM COMMISSION ACT

(CAP. 478)

Financial Incentives for the Audiovisual Industry Regulations,

IN exercise of the powers conferred by articles 26(1) and 33 of the

Malta Film Commission Act, the Minister for Investment, Industry and

Information Technology, after consultation with the Prime Minister and

the Minister of Finance, has made the following regulations-

(1) The title of these regulations is the Financial Incentives

for the Audiovisual Industry Regulations, 2008.

(2) These regulations shall be deemed to have come into

force on the 1 st of December, 2007.

(Regulation 7)

Certificate of Provisional Approval

Under Part V of the Malta Film Commission Act (Cap. 478) and in accordance

with the Financial Incentives for the Audiovisual Industry Regulations, 2008 and the

Guidelines established by the Commissioner< and

In respect of the application received by the Film Commissioner on the [date] by

[name of qualifying company]<

The Commissioner hereby certifies that in relation to [name of the production

applying for the cash rebate], the said audiovisual production is regarded as a qualifying

production for the purposes of the said Part V of the Malta Film Commission Act, and

shall be granted a cash rebate equivalent to [percentage to be rebated to the production]

of the total qualifying expenditure, currently estimated at [total amount of qualifying

expenditure], subject to the following conditions>

1. This certificate is issued strictly on the basis of the information supplied by

the qualifying company in the course of the application process.

2. Any change of substance in the information originally supplied to the

Commissioner that may arise as the project progresses must be notified in writing to

the Commissioner in advance of the proposed change being effected, or as soon as the

change comes to notice.

3. Failure to notify the Commissioner accordingly will be regarded as a breach

of the conditions of this certificate.

4. Where differences in the final overall budget exceed or fall below the estimated

overall budget indicated in the application for provisional approval by more than ten

percent, the incentive will be granted on the overall qualifying expenditure indicated

in this certificate or on the final overall budget indicated in the application for final

approval, whichever is the lowest.

Final Application

5. On completion of the qualifying production, the qualifying company is to

submit the following documents to the Commissioner>

(a) an immediate written notification that the filming activity in Malta of

the audiovisual production for which a benefit is being sought is completed<

(b) full details of the qualifying company and of any beneficiary of the

cash rebate<

(c) accounts detailing the amounts spent on each individual element of the

project for which a benefit is being sought, including expenditure on the direct

employment of Maltese and EU#EEA nationals and on eligible goods and services<

(d) the accounts must include “top sheet” production expenditure summaries

covering the pertinent expenditure for which a benefit is being sought and the

entire production expenditure on the film<

(e) a detailed analysis of relevant labour costs (including gross full-time

and part-time wages, withheld tax, Social Security contributions and monies paid

to employees employed directly on a contract of service)<

(f)

all accounts are to be presented net of Value Added Tax<

(g) a receipt from the pertinent fiscal authorities showing that the amounts

due were already paid to such authorities.

6. Following the submission of a final application, the qualifying company is to

grant access to representatives of the Commissioner to audit the accounts pertaining to

the audiovisual production for which a benefit is being sought. Any auditing exercise

shall be conducted in agreement with the qualifying company.

7. The qualifying company is to provide to the satisfaction of the Commissioner

details of the eligible expenditure, including invoices and receipts of the pertinent

qualifying production.

8. The Commissioner is to provide the qualifying company the cash rebate no

later than five months from the date of the Commission’s final approval.

Obligations

9. The qualifying company shall ensure that the filming activity and all other

activities taking place in Malta are conducted in accordance with the Laws of Malta.

10. The qualifying company is to include the credits in the language of the film

production “Produced with the support of the financial incentives provided by the

Government of Malta” and “Filmed on location in Malta” as the case may be< these

credits are to be located in a prominent position in the closing credits, immediately

after the cast and crew credits.

11. The qualifying company is to ensure that the recruitment of personnel in

Malta, including recruitment of extra talent, is conducted fairly and without prejudice.

12. Prior to the commencement of filming in Malta, the qualifying company is

to provide the Commissioner with the names of at least three Maltese trainees to be

engaged with the production.

13. Following completion of the audiovisual production, the qualifying company

is to provide the Commissioner with stills from the film and behind-the-scenes footage

to be used by the Commissioner for its international marketing and promotional purposes

when showcasing Malta as a film location.

14. The qualifying company is to provide the Commissioner with three copies

of the film on DVD PAL format.

(1)

In these regulations, unless the context otherwise

requires –

“the Act” means the Malta Film Commission Act<

“certificate of provisional approval” means the certificate

issued in terms of regulation 7 of these regulations, in the form set

out in the First Schedule to these regulations<

“the Commission” means the Malta Film Commission<

“the Commissioner” means the Film Commissioner<

“completion” means the termination of filming activity in

Malta of an audiovisual production and “completed” shall be

construed accordingly<

“co-production””means a qualifying production which is the

subject of a co-production agreement between two or more co-

producers<

“cultural product” means an audiovisual production in respect

of which the Commissioner has established that the content of the

audiovisual production is cultural according to the criteria set out

in the Second Schedule to these regulations<

“eligible expenditure” means the items of expenditure incurred

by the qualifying company in relation to the qualifying production

that are eligible for the purposes of calculation of the amount to be

granted as a financial incentive in accordance with regulation 5 of

these regulations<

“EU member state” means a member state of the European

Union as defined in the European Union Act<

“final approval” means the approval granted in terms of

regulation 8 of these regulations<

“the financial incentive” means the financial benefit provided

for in regulation 5 of these regulations<

“Guidelines” means the guidelines that may be issued by the

Commissioner from time to time<

“difficult and low-budget productions” means audiovisual

productions with a total budget not exceeding EUR100,000 (or

other currency equivalent) and which would have little if any

prospect of commercial success because of their experimental

nature or because they represent a high level of creative risk< and

which meet the requirements set out in regulation 3 of these

regulations<

“the Minister” means the Minister responsible for the film

industry<

“principal photography” means the filming of major or

significant components of an audiovisual production which

involves lead actors<

“qualifying company” means a qualifying company as defined

in article 25 of the Act and which meets the conditions established

by regulation 4 of these regulations<

“qualifying production” means a qualifying production as

defined in article 25 of the Act and which meets the conditions

established by regulation 3 of these regulations<

“State Aid Monitoring Board” means the State Aid Monitoring

Board constituted under article 57 of the Business Promotion Act< Cap. 325.

“undertaking” means an entity carrying out an economic activity.

(2) Words and expressions which are also used in the Act

shall, in these regulations, have the same meanings as in the Act.

(1) An audiovisual production shall be considered a

“qualifying production” for the purposes of these regulations if the

audiovisual work -

(a) is a cultural product produced wholly or partially in Malta

on a commercial basis with a view to profit< and

(b) is produced wholly or principally for exhibition to the

public in cinemas or through television broadcasting< and

(c) makes a valid contribution to the expression of creativity

and culture through the development of production capability skills

in the media of film and television< and

(d) is based on a format approved by the Commissioner.

(2) The criteria set out in sub-regulation (1) of this regulation

shall be applied without prejudice to the conditions established in article

25 of the Act and the Schedule to the Act, and in accordance with the

Second Schedule to these regulations and the Guidelines.

(1) The qualifying company shall be the entity responsible

for all activities involved in making a qualifying production and having

access to full financial information for the total production worldwide,

which can be made available to the Commissioner upon the latter’s

request>

Provided that there shall be only one qualifying company with

respect to a given qualifying production.

(2) Where the qualifying production is a co-production,

the co-producers shall appoint one of the co-producers amongst them

to act as the qualifying company in respect of the qualifying production

for the purposes of these regulations and the appointed co-producer

shall be deemed to be the entity responsible for all activities involved

in making the qualifying production.

Provided that>

(a) the financial incentive granted shall be apportioned

between the co-producers as agreed between them, or in the absence

of any agreement to that effect, in proportion to their share in the

overall budget of the qualifying production< and

(b) the co-producers shall be jointly and severally liable

for their obligations under the Act and these regulations.

(1) A rebate of up to twenty two percent of eligible Financial incentives

for audiovisual

expenditure may be given as a cash grant, which shall be exempt for productions.

the purposes of the Income Tax Act, to qualifying companies upon Cap. 123.

completion of a qualifying production, in accordance with these

regulations and the Guidelines>

Provided that the said eligible expenditure shall not constitute

an eligible expense for State aid under any other legislation in Malta>

Provided further that the total State aid from which a

qualifying production may benefit under this regulation or any other

source shall not exceed the ceiling provided for in the Guidelines.

(2) The eligible expenditure qualifying for the financial

incentive shall be established by the Commissioner in accordance with

the Guidelines, provided that the eligible expenditure shall not exceed

eighty percent of the overall budget of the qualifying production, and

provided further that in the case of a co-production which involves a

co-producer established in Malta and which is approved by the

Commissioner as a co-production under the Act, the eligible expenditure

incurred by that co-producer shall not exceed eighty percent of the part

of the qualifying production’s budget contributed by the co-producer

established in Malta.

(3) The level of the financial incentive shall be determined

by the Commission in accordance with article 26 of the Act, the

provisions of these regulations and the Guidelines.

(4) The Minister, in agreement with the Minister responsible

for culture and with notification to the Minister responsible for finance,

may from time to time publish a call for applications aimed at difficult

and low-budget productions for the purposes of granting cash rebates

in respect of such productions subject to the terms and conditions set

out in these regulations, and the Guidelines, and as may be further

specified in the call for applications. Notwithstanding sub-regulation

(1) hereof, such rebates for difficult and low-budget productions may

amount to a cash grant of up to thirty two percent of eligible expenditure,

and shall be exempted from the provisions of the provisos with sub-

regulation (1) of this regulation.

(5) The aggregate amount of financial incentives that may

be granted under these regulations in a given financial year in terms of

the Constitution shall not exceed the amount specifically appropriated

in Government’s financial estimates for that particular financial year.

(1) The application for the financial incentive shall be

submitted to the Commissioner by the qualifying company or its local

branch or agent in accordance with the Guidelines.

(2) The application mentioned in sub-regulation (1) of this

regulation shall be submitted together with such documentation and

information as may be required by the Commissioner, and shall include

the documents and information listed in the Guidelines.

(3) Subject to the provisions of regulation 10 of these

regulations, the application must be submitted at least thirty days before

commencement of the principal photography in Malta or in any other

EU Member State for which a benefit is being sought under these

regulations.

(1) Following the receipt of the application made in

accordance with regulation 6 of these regulations, the Commissioner

shall make a recommendation in writing to the Commission regarding

the level of the financial incentive to be granted to the qualifying

company, stating that the production is a cultural product and meets the

requirements of a qualifying production, and shall forward to the

Commission any documentation or information furnished by the

applicant as the Commission may require>

Provided that where the Commissioner finds that the

application is not made by or on behalf of an entity that is a qualifying

company and, or in respect of a qualifying production, it shall inform

the applicant that the application is rejected and the Commissioner shall

not make such recommendation.

(2) Following the Commission’s determination of the level

of the financial incentive to be granted to the qualifying company, which

shall not exceed the amount recommended in terms of sub-regulation

(1) of this regulation, the Commissioner shall issue a certificate of

provisional approval, in the form set out in the First Schedule to these

regulations, to the qualifying company which shall state the percentage

of expenditure rebated to the production concerned and the conditions

that must be met in order to obtain the final approval under regulation 8

of these regulations.

(1) Upon completion of the qualifying production in respect

of which a certificate of provisional approval was issued in accordance

with regulation 7 of these regulations, and no later than six months

after completion thereof, the qualifying company or its local branch or

agent shall submit an application for final approval to the Commissioner

in accordance with the Guidelines.

(2) The application mentioned in sub-regulation (1) of this

regulation shall be submitted together with such documentation and

information as may be required by the Commissioner, and shall include

the documents and information listed in the Guidelines.

(3) Following the receipt of the application made in

accordance with sub-regulations (1) and (2) of this regulation, the

Commissioner shall make a recommendation in writing to the

Commission regarding the amount of the financial incentive to be

granted to the qualifying company and shall forward to the Commission

any documentation or information furnished by the applicant as the

Commission may require.

(4) The Commission shall inform the Commissioner in

writing of its decision on the amount of the financial incentive to be

granted to the qualifying company>

Provided that the amount of the financial incentive determined

by the Commission shall not exceed the amount recommended by the

Commissioner in terms of sub-regulation (3) of this regulation.

(5) The Commissioner shall make the necessary

arrangements for the implementation of the Commission’s decision on

the amount of the financial incentive to be granted to the qualifying

company.

(1) Where after submission of the application for provisional Significant budget

changes.

approval in terms of regulation 7 of these regulations, the final overall

budget of the qualifying production, to be indicated in the application

for final approval in terms of regulation 8 of these regulations, is expected

to differ significantly from the estimated overall budget indicated in

the application for provisional approval, a new application for

provisional approval shall be submitted>

Provided that there shall be deemed to be a significant

difference where the final overall budget to be indicated in the application

for final approval exceeds or goes below the estimated overall budget

indicated in the application for provisional approval by more than ten

percent.

(2) New applications for provisional approval in terms of

sub-regulation (1) of this regulation, shall be submitted and determined

in accordance with regulations 6 and 7 of these regulations, which shall

apply mutatis mutandis>

Provided that sub-regulation (3) of regulation 6 shall not apply

to the submission of such new applications.

(3) If no new application is submitted as required by sub-

regulation (1) of this regulation and the Commissioner finds that the

final overall budget of the qualifying production, as indicated in the

application for final approval in terms of regulation 8 of these

regulations, differs significantly from the estimated overall budget

indicated in the application for provisional approval, the amount of the

incentive to be granted to the qualifying company shall be determined

by reference to the estimated overall budget indicated in the application

for provisional approval or the final overall budget indicated in the

application for final approval, whichever is the lowest.

These regulations shall apply to audiovisual productions in

Time of initiation of

respect of which an application for provisional approval is made in

accordance with regulation 6 of these regulations before 31 December

2009.

The qualifying company or its local branch or agent shall

provide the Commissioner with any information and documentation

which he may request for the exercise of his functions and those of the

Commission for the purposes of these regulations, either on the initiative

of the qualifying company or of its local branch or that of the agent

himself, or upon the request of the Commissioner>

Provided that the Commissioner may specify the on-going reporting

requirements of the qualifying company or of its local branch or that of

its agent in the Guidelines.

Any information furnished by the qualifying company or its

local branch or agent shall at all times be treated as confidential and

shall be used solely by either the Commission or the Commissioner, or

both, for the purpose of carrying out their respective functions for the

purposes of these regulations>

Provided that the information furnished by the qualifying company

or by its local branch or agent may be disclosed if and to the extent

required by or pursuant to any enactment, including but not limited to

fiscal legislation, or with the permission in writing of the legal or natural

person providing such information.

(1) The qualifying company, including its local branch or Obligations

qualifying

agent, if any, shall ensure compliance with the conditions and company.

requirements set out in the certificate of provisional approval and in the

Guidelines.

(2) If the qualifying company or its local branch or agent,

if any, fails to meet any of the conditions and requirements as referred

to in sub-regulation (1) of this regulation, the Commissioner may

withdraw its provisional or final approval for the grant of the financial

incentive. If the qualifying company or its local branch or agent has

already received the financial incentive and the Commissioner

establishes that the conditions and requirements as referred to in sub-

regulation (1) of this regulation have not been complied with, it shall

refund to the Commissioner the amount of the financial incentive

received upon the Commissioner’s request.

Where the financial incentive has been provided in terms of Examination of

records.

these regulations to an undertaking, the Commissioner may –

(a) from time to time make or cause to be made such

examination of books, accounts, documents, premises and all other

things and matters of that undertaking, its local branch or agency,

as the case may be, as may be necessary to ensure that the provisions

of these regulations, and the conditions and requirements set out

in the certificate of provisional approval and in the Guidelines are

complied with< and

(b) request such financial statements from the undertaking,

its local branch or agency, as the case may be and as may be

required.

The Commissioner shall keep, for a minimum of five years, Database of

assistance provided.

a database of all the financial incentives provided to, or claimed by,

undertakings in terms of these regulations in order to enable it to –

(a) verify whether the provisions of the Act and of these

regulations have been complied with< and

(b) provide the State Aid Monitoring Board with such

information as it may require.

The Financial Incentives for the Audiovisual Industry Repeals L.N. 65 of

2006. Regulations, 2006 are hereby repealed.