Financing systems consigned in the colombian law. By: Camila Ávila

We all know film making process is not possible without funds, this operates directly in all of its steps. And for film making process, I mean in all countries or types, even in college projects it is needed. In this case, I will like to emphasize in Colombia, and in some of the financing possibilities supported by the colombian film law, benefiting the impellers of this media.

The Film Law 814 of 2003 or the colombian Film Law, comes up to motivates filmmakers, investors, and generally colombian society so they can take advantage of the new benefits offered by it, making cinema a development tool for the industry and the country itself. This law, is the four year consultation product among the principals actors into the colombian film industry nowadays. Thanks to it, cinema is seen as a cultural expression, and also (and most important of all) it is supported, getting a higher economical position.

According to that and focusing in the main topic, The Film Law 814 of 2003, counts with three principle financing systems for colombian film progress, which will be explained then.

1  Film Development Fund

Outlined in  Chapter II of the Law 814 of 2003

Is a financing tool that distributes proceeds collected from tariffs (From exhibitors, distributors and producers) legislated in Law 814 of 2003 aimed at reinvesting resources generated by the film industry in this same industry.  This fund awards yearly non- refundable grants to Colombian film projects in every stage of development, from screenplay and project development to production, post-production and promotion, distribution and exhibition.

It also provides integral industry support by sponsoring training activities for technicians, creative staff and directors and provides audience training, inspiring film creation and providing a critical understanding of audio visual content. The FDC also supports the creation of theatre infrastructure, especially in remote regions, film laboratory development, anti-piracy initiatives, and conservation of Colombia's audio visual heritage.

Administrated by PROIMAGENES COLOMBIA which provides technical secretariat pursuant to Law 814, with supervision from state control and fiscal bodies (Comptroller, Office of the Attorney General, Auditor General), the Ministry of Culture, an external auditor selected by the CNACC and by the film industry sector through their CNACC representatives or directly.

·      Its resources are constituted by

• After the taxes repeal over the movie ticket of a 10/ off, in force since 1932, exhibitors will now impose an 8.5% parafiscal contribution from the incomes of exclusively foreign films. Distributors must also pay an 8.5% parafiscal contribution, only by foreign films too. As well, the Colombian film’s producers must deduct 5% from the box office’s incomes. This contribution will be for themselves in the three cases, as it will be reinvested in the Film Development Fund. This contribution is know as Film Development Fee.
• The resources arising from operations carried out with Fund resources.
• Proceeds of the investments sales.
• Donations, transfers and cash contributions received.
•  International cooperation contributions.
• Penalties
•  Resources assigned by the national budget.

 Funds investment

A 70% will be use for film production through non-refundable grants and refundable credits. Which means that the first option will provide incentives such as awards, scholarships, among others; in the other hand, the second one will be provided through the banking system.

The remaining 30 percent will be invested through five lines, all aimed at promoting Colombian film industry:

• Strengthening a film information system; ranging from the efficient flow of data in lockers, to create an updated and reliable database with all the information of cinema in Colombia.
• Formation of public and producers in order to strengthen production chains.
• Technological support to film-related industries (sound, photography, developing, etc.)
• Preservation of Colombian audio visual memory.
• Cinematography research
• Actions against copyright violation in marketing, distribution and exhibition of films.
• Up to ten percent (10%) as compensation to the Film Development Fund administrator.

2 Tax incentives for film investments and donations

    Outlined in Chapter III, Article 16 of the 814 Law of 2003

The private companies which contribute with the income tax, could be benefit by donating to film projects, taking a 125% off from its declaration. The ones that invest in film projects, will be benefit, as for each 100 pesos invested in culture they may declare 125 at their income statement, decreasing the tax burden.

The investing/donating companies, could do it through an autonomous equity made on behalf of a film project (Feature or short film), which may be approved and certified by a National Project Recognition, issued by the Film Direction. The companies are free to choose the project to support.

This may promote private companies for donating and investing in film industry, profiting and benefiting both businessmen and producers.

Film projects requirements for getting a National Project Recognition

The producers of such projects (feature films or short films) may request a National Project Recognition to the Film Direction according to the requirements listed in Article 17 of Decree 352 of 2004, and 512 resolution of 2004. These requirements are:

• Project’s technical feasibility.
•  Projected budget’s viability.
• Consistency between the technical/artistic elements, and the projected budget.
• Complete presentation of the whole project, including script, cast, locations, shooting schedule, information about the technical/artistic team, and an itemized budget.
• Documents that support the stock of base capital, which may not be less tan 10% of the total project value.
• Meet the requirements set out in Articles 43 and 44 of Law 397 of 1997 and Decree 358 of 1998, which summarizes the conditions having a film to be considered as domestic production or co-production, both feature film and short film. These provisions can be found on the website of the Ministry of Culture.

How to get an investing or donating certificate

Once the the investment is made, through an autonomous equity, the producer should request an investing or donating certificate, in which the investor/donor gets the tax benefit.

It is important that the investor/donor has no participation as producer or co-producer in the supported project.

3 Film Projects securitization

Directors shall take their projects to the stock market so these can be acquired as shares by private buyers. Thus movies can generate money before being in theatres, contributing to its production “auto financing”. Once produced, the box office profits will be proportionally distributed among the shareholders.

Sources:

•  Proimagenes Colombia. (n.d.). The Film Development Fund : What is FDC? | Proim. Retrieved August 16, 2016, from http://proimagenescolombia.com/secciones/fdc/que_es_el_fdc.php?lang=en 
•  Proimagenes Colombia. (n.d.). Cine colombiano: Legislaci. Retrieved August 16, 2016, from http://www.proimagenescolombia.com/secciones/cine_colombiano/legislacion/legislacion.php
• Secretaría General de la Alcaldía Mayor de Bogotá D.C. (2003, July 02). Consulta de la Norma:. Retrieved August 16, 2016, from http://www.alcaldiabogota.gov.co/sisjur/normas/Norma1.jsp?i=8796 
•  KRIEGER, S. (n.d.). LA LEY DE CINE PARA TODOS (Colombia, Ministerio de Cultura, Proimagenes).