Film Tax Incentives

Operation of Hotel Tax Reduction

Hotel tax reduction is based upon total qualified production expenditures and total room nights.

Ex: Qualified Production Company books 251 room nights and expends $300,000 on QPE: bill reflects a hotel tax of 6%.

Assume room rate of $200 per night for 251 nights. With out reduction QPC would pay $5,020.00 in hotel taxes on a $50,200.00 bill. With reduction – QPC pays $3,012.00, a savings of $2008.00

Operation of Income Tax Credit

Amount of income tax credit is based upon local hiring.

Assume 25% of the total workforce utilized in the Territory are USVI residents; tax credit is equal to 15% of total amounts paid by QPC in withholding.

Ex: QPC pays $1,500,000 in withholding to the USVI. Credit is equal to $225,000.00

Operation of Income Tax Credit

But QPC doesn’t have income tax obligation to the USVI – so credits must be transferable.

QPC sells tax credit to VI Buyer for $191,250.00 ($.85 cents on the dollar)

VI Buyer utilizes $225,000 tax credit against its income tax obligation to the USVI.

Operation of QPE Rebate

Rebates are based upon qualified production expenditures in the USVI.

Assume QPC spends $1,000,000.00 on QPE.

QPC entitled to a rebate of $90,000.00.

Case Study In Louisiana, after the production incentive bill was

passed in 2005, the industry grew from supporting 5,437 jobs and having $7.5 million in output in 2003 to supporting 18,882 and producing $343.8 million in output in 2005.

Similarly, according to comptroller Thomas DiNapoli, New York has seen a $7 billion influx into the state’s economy between 2004, when the incentives were instituted, and 2008. During that same period, the number of motion picture, video production, and post-production jobs also rose by 14.2%.