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Film Tax Incentive

Overview

Tax Incentives in the region are new but they have become very important in the attraction of new projects to our countries. Since the approval of their tax incentive law in 2012, the Dominican Republic has hosted more than 200 projects in just a span of 10 years.

Panama is no exception to this boost in production. During the last 10 years big budget productions have come to this small nation at the far end of Central America. Productions like Suicide Squad, James Bond, and a large number of reality shows for countries like Canada, the United States, France, Germany, etc.

The latest to join this new era of incentives is Costa Rica. Being a preferred destination for tourism in the region the country is starting to provide a well deserved boost to their film production industry. Their Film Industry Attraction law was approved in 2021 and has been put in place this year by the publishing of the procedure for projects that want to apply for the tax incentives.

The tree countries offer a very similar spending threshold to apply for the incentives. The applicable in country expenses must exceed $500K, whoever the tree countries offer a very distinctive rate for the incentives, Panama and the DR offer a 25% tax rebate of the in country expenses. Costa Rica is offering an 11.7% rebate on the 13% VAT rate applicable for products and services.

The best part of these incentives is that they are not tied to the specific creating of motion films or documentaries and all type of projects apply. In Panama for example even the production of video games apply to this tax incentive. Costa Rica offers the incentive to music video and tv commercials also.

Per Country Details

Panama. In Panama’s case there are a few specific requisites to comply with most importantly that the foreign production company needs to hire a local production company and a certified CPA must complete the paper work to submit to the local tax authority. Other requisites are the registration of the project with the Film Commission.

Costa Rica. Costa Rica requires that the project mus register with the Film Commission and that all documentation needs to be provided to Procomer, a government entity, for expenses validation and recommendation to the tax authority. One of the key advantages Costa Rica is promoting is that their process is said not to take more than 2 months.

Dominican Republic. The Dominican Republic offers a very strong system of tax incentives that offers up to 25% of tax credit on all elegible expenses related to the production. This tax credit can be transferred to local taxpayers. The benefits of the incentives also apply to foreign cast and crew.

These are the major takeaways of the current state of tax incentives however there are more benefits like import benefits so taxes are not paid when importing equipment into the countries, or immigration benefits like waiver of the processes for work permits for foreign crews.

If you want to get a more detailed explanation of the tax incentives that apply in Panama, Costa Rica or the Dominican Republic don’t hesitate to reach out to us to discuss your project. We work with a regional law firm that can provide regulatory advisory on the subject and can handle the procedures for you in each country.