House body approves tax provisions in Philippine Film Industry Development bill

The House Committee on Ways and Means has approved all tax provisions
in the proposal to promote and support the development and growth of
the Philippine film industry by reorganizing the Philippine Film
Development Council (PFDC) into the Philippine Film Commission (PFC).

The substitute bill on the proposed “Local Film Industry Development
Act of 2011” was approved earlier by the House Committee on Government
Reorganization and subsequently referred to the Committee on Ways and
Means chaired by Rep. Hermilando Mandanas (2nd District, Batangas) for
approval of its tax provisions.

The bill authored by Reps. Danilo Ramon Fernandez (1st District,
Laguna), Rufus Rodriguez (2nd District, Cagayan de Oro City), Maximo
Rodriguez (Party-list, Abante Mindanao), Ma. Georgina de Venecia (4th
District, Pangasinan), Lani Mercado-Revilla (2nd District, Cavite) and
Marcelino Teodoro (1st District, Marikina City) seeks the
reorganization of the PFDC created under Republic Act 9167 into the
PFC, which shall be an independent agency and whose powers shall
include coordination of all programs and policies of government
departments and agencies related to the development of the local film
industry.

In a recent hearing presided by Rep. Reynaldo Umali, a vice chairman
of the Committee on Ways and Means, the panel approved Section 15 (
Privileges of Graded Films) of the bill providing that a grade “A” or
“B” shall entitle the film producer to an incentive equivalent to the
amusement tax imposed and collected on the graded films by cities and
municipalities in Metro Manila and other highly urbanized and
independent component cities in the Philippines pursuant to Sections
140 and 151 of Republic Act 7160.

For “A” films, it shall be 80 percent of the amusement tax collected
on such films. The remaining 20 percent shall accrue to the PFC funds.
For grade “B” films, it shall be 65 percent of the amusement tax
collected on such films, and the remaining 35 percent shall accrue to
the PFC funds, provided that 30 percent of the film that was graded A
or B, with the other 70 percent accruing to the film producer.

The committee also approved Section 16 (Amusement Tax Deduction and
Remittances) which provides that all revenues from the amusement tax
on the graded film which may otherwise accrue to the cities and
municipalities in Metro Manila and highly urbanized and independent
component cities in the country pursuant to Sections 140 of RA 7160
during the period the graded film exhibited, shall be deducted and
withheld by the proprietors, operators or lessees of theaters or
cinemas and remitted within 30 days from the termination of the
exhibition to the PFC which shall reward the corresponding amusement
tax to the producers and all the talents and workers of the graded
film within 15 days from receipt thereof.

Proprietors, operators or lessees of theaters or cinemas who fail to
remit amusement tax proceeds within the prescribed period shall be
liable to a surcharge equivalent to five percent of the amount due for
each month of delinquency which shall be paid to the PFC according to
the bill.

Section 21 on Funding was also approved which provides for the initial
funding of the PFC, there shall be created a Philippine Film
Commission Fund Account to be deposited in the National Treasury.  It
shall be included in the annual General Appropriations Act and shall
be constituted from the proceeds from a special film commission tax of
P1.00 to be levied on all admission tickets of movie houses in the
country for a period of 20 years.

To augment its operational expenses, the PFC may utilize the remaining
20 percent and 35 percent of the amusement tax collected during the
period grade A and B films are exhibited. It may also impose
reasonable fees and charges for services rendered provided that the
amount actually collected shall be deposited in the National Treasury
as a special account in the General Fund and may be used to augment
its maintenance and other operational expenses, capital outlays except
the purchase of motor vehicles, subject to existing accounting and
budgeting rules and regulations.

The PFC may also secure funding from the Philippine Amusement and
Gaming Corporation in the amount equivalent to two percent of its
gross income necessary to subsidize the production of 30 films
annually.

Lastly, the committee approved Section 22 on Authority to Accept
Donations which provides the PFC may accept donations, contributions,
grants,  bequests or gifts, in cash or in kind, from various sources,
domestic or foreign, except from movie producers relevant to its
functions. Cash donations shall not be used to fund the personal
services requirements of the PFC, and that any donation, contribution,
subsidy or financial aid to the PFC shall be exempt from taxes of any
kind and constitute allowable deduction in full from the income of the
donors, contributors or givers for income tax purposes.

Rep. Rufus Rodriguez (2nd District, Cagayan de Oro City) said the
approval of these four tax provisions would give the necessary support
to help the “dying” film industry.

The proposed “Local Film Industry Development Act of 2011” was filed
pursuant to the constitutional guarantee on freedom of expression and
the principle of giving priority to arts and culture to foster
patriotism and nationalism, accelerate social progress, and promote
total human liberation and development according to its authors.

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