Section 481 TCA 1997 provides a 32% payable credit for eligible expenditure on film production in Ireland. It is available to Irish and international film production companies that are resident in the State or in an EEA State and carry on business in the State through a branch or subsidiary. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.
As the level of future investment in the film industry, and therefore future claims to the tax credit, cannot be quantified, the potential saving from a withdrawal of the scheme could only be estimated by reference to the historical cost of film credit.
The annual cost of the film tax credit can be found under the ‘Investment in Films’ heading in the Costs of Tax Expenditures table published at link: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx. This shows a cost for 2016 of c.€75 million and a cost to date for 2017 of c.€23 million. Due to the manner in which film credit is claimed, the tax costs are provisional and continue to increase over two years. The table, and the figures for 2016 and 2017, will be updated accordingly over time.
The Deputy may also be aware that a cost benefit analysis of the film tax credit was conducted by my Department in 2018, and is available online in the following report: http://www.budget.gov.ie/Budgets/2019/Documents/Tax%20Expenditures%20Report%202018%20FINAL%2017.10.18%20(002).pdf. This analysis examined the economic cost and benefits of the scheme for the year 2016, while taking into account standard estimates of the shadow price of labour, the shadow price of public funds, and grant deadweight - subject to data availability. The total result of the cost-benefit analysis was a net economic cost to society of €72 million in 2016, before consideration of the cultural dividend and other unquantifiable benefits. The average net economic cost for 2015 and 2016 was €56.2 million. However, it is important to note that data constraints and the unquantifiable nature of the cultural return to society make it difficult to capture the entirety of economic benefits associated with this relief.
A number of significant changes were made to the credit as part of the 2018 Finance Bill process. In recognition of the nature of the production cycle and the long lead in times needed for productions to be undertaken, the credit was extended from its original end date of 31 December 2020 to 31 December 2024. In conjunction with this extension, and in order to ensure a robust administration process and oversight of claims, the credit was moved to a self-assessment system, in line with other similar reliefs. The application process has also been divided between the Revenue Commissioners and the Department of Culture, Heritage and the Gaeltacht to provide an opportunity for earlier engagement on the training requirements associated with the credit, including the quality of training to be provided. The Finance Bill 2018 also provided for a new short-term, tapered regional uplift, commencing at 5%, for certain productions being made in areas designated under the State aid regional guidelines. The regional uplift will be phased out on a tiered basis over 5 years.