Section 35 of the 1987 Finance Bill contains an incentive for companies to invest in Irish film productions. For a production company to take advantage of this
• the company must be incorporated in Ireland
• the film must be commercial and for public showing
• 75% of the film must be made in Ireland
• there is a limit of £100,000 per investor
• the film must be made within 2 years
• not more than 60% of the costs of any one production can come under this scheme

As for the investors, the incentives are aimed at non-manufacuring companies eligible to pay the 50% corporation tax rate. The money invested cannot be taken out for three years.

These companies effectively get 50% of investment back initially. As well as that, after the three year period, no Capital Gains Tax is charged on money take out, and in the intervening period the company can sell shares of its investment without being liable to tax.

Those are the basic provisions. Even with their limitations they have been welcomed by the film industry. However, since the government's announcement of the Film Board abolition, with these tax incentives in replacement, the limitations seem so seven as to make them useless for all but a few Irish filmmakers.

Media solicitor, James Hickey, at a recent meeting, outlined some of the main drawbacks of the scheme. Firstly, the market for investors is small, with many companies finding various ways of not paying Corporation Tax. Most of those who do pay Corporation Tax only pay at 10%, thereby making them ineligible for the scheme. Then there is the limit of £100,000 per investor. Any feature film would therefore need multiple investors, thereby further complicating the process of financing the film. The money invested must be used within two years. Given the lengthy process of developing and financing films, one which is continually prone to set-backs, this may prove to be too short a period. This scheme, as an addition to the work of the Film Board, would be quite useful. However, on its own it can do very little.

Michael Algar, the Board's chief executive, has described the scheme as 'still-born'. with 40% of the investment in a film coming from other sources, usually from abroad, and the money needing to be in place before the other 60%, the role of the board in providing development money to get it off the ground was essential. Frank Deasy of City Vision has emphasised this point, in relation to 'The Courier'. Of £100,000 provided by the Board for the film, the £8,000 for development, to turn a treatment into a script and to be able to show it to prospective investors abroad, he says, was the single essential investment to turn the idea into a full length feature.

On the new scheme, Deasy wondered if the tax shelter values of investing companies would endure the inevitable crises of production in the way that a passion for making films will. What kind of films will this incentive scheme produce. Will the scheme help to develope a film culture for this country? Maybe this has been answered by Michael Algar when he said he foresaw a return to the pre-1980s situation, with foreign companies being able to take advantage of this incentive and make films in Ireland. This is no harm in itself, but the films made would have nothing to do with an Irish film industry.

Michael Collins

This article was printed in Film Base News 2 (Jul/Aug 1987).