Magazine article Variety

South Africa Rebate Hits Troubled Waters

Magazine article Variety

South Africa Rebate Hits Troubled Waters

Article excerpt

A GROWING RIFT IS EMERGING between independent producers and the South African government, with frustrated entertainment business pros accusing the Dept. of Trade and Industry, the body tasked with disbursing state funds, of undermining a rebate that's the lifeblood of the local industry.

Since early 2016, numerous stakeholders say they've watched with alarm as a rebate that once was administered like clockwork has been beset with delays and what they describe as false promises, imperiling dozens of local films.

For its part, the DTI claims that disbursements have been delayed by audits that, in some cases, discovered producers who have misrepresented their expenses.

"The DTI is experiencing serious challenges," says Paul Raleigh of Hollard Film Guarantors, which has provided guarantees for 200 films in the past seven years. "The uncertainty is very worrying, and there's not a single financial institution that's willing to cash-flow the incentive."

The Independent Producers Organization, which says it represents 80% of the country's working producers, approached the DTI last year with what it describes as "increasingly urgent concerns" over the impact uncertainty about incentives was having on local productions. Among its complaints: protracted delays in paying out the rebate; payouts that were often smaller than promised; and abrupt changes to application guidelines.

"But the IPO has not had a straightforward answer to any of the issues addressed to the DTI," the body told Variety.

The DTI has maintained that the process is business as usual. "From our point of view, nothing has changed from the past," says Nelly Molokoane, the director of film and TV incentives at DTI. She insists there has been "engagement" with the industry as the department prepares to submit a draft proposal for a new rebate scheme.

Since its inception in 2004, the rebate has had a profound impact on the South African entertainment industry. Local production has spiked dramatically, while the rebate scheme has spurred a boom in foreign productions.

South Africa offers foreign productions a 20% rebate on all qualifying local spending, rising to 25% if some post-production is done in the country, with a R50 million (around $3.7 million) cap. For local productions, the rebate starts at 35% for the first R6 million (around $441,000) of qualifying spending, with 25% on qualifying spending over that amount. …

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