Fixing the film industry with a National Film Policy and revised incentives
2nd March 2017
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Sixteen years after the government first spoke of a national film policy, an attempt at implementing a solid, clear policy is underway. Malcolm Scerri-Ferrante writes about how financial incentives for foreign producers and the engagement of local crews can be affected by new fixes.
The frequency of international filming in Malta increased tenfold over the last two decades, with a noticeable climb starting about 10 years ago after a cash rebate was introduced. The local servicing industry has also seen substantial growth but the lack of a serious national film policy led to this industry not catching up with the huge influx.
Over the past decade, several production service companies were registered but the number of local crews have not increased fast enough. Equipment houses and specialised film-related rental companies are also limited despite the growing popularity of the island as an international film destination.
The truth of the matter is that local film crews of a first-class nature exist only about one and a half deep. And, anyway, some department heads still cannot be sought locally.
Foreign producers bringing their productions to Malta do not wish to be the second or third one preparing or filming concurrently on the island unless they are ready to fly in a large contingent of foreign crew. Moreover, some positions need time to absorb local knowledge. And time is a luxury that seldom exists.
The lack of local crew or the 'clashing' of international productions - depending on how you may look at it - is indeed a serious problem that needs urgent attention. Orchestrating productions to reach the island's shores in a back-to-back fashion is, of course, an impossible feat.
When evaluating the qualified expenditure for an EU country’s rebate, EU policies discourage discrimination between citizens of different EU countries. However, Malta quite understandably prefers to rebate cash to producers utilising Maltese or local residents rather than EU crew members who do not reside in Malta and who are not forming and strengthening the local service industry, even if foreign crew members enable the economy to benefit from more accommodation, per diem and travel expenses.
Meanwhile, the island wants to keep the momentum of foreign film productions and all their direct and indirect benefits to the economy.
These factors place Maltese lawmakers between a rock and a hard place.
A national film policy, the first of its kind in the country, hopes to tackle this issue and several others. In short, Malta's priority - and no small challenge, at that - is to increase the local crew base and fast-track training opportunities while continuing to attract enough international work so that local crew members can finally sustain a full-time career.
With this in mind, the government intends to revise the financial package to give producers a bigger incentive, other than the obvious budget savings, when hiring more Maltese behind and in front of the camera. It is reported that this strategy is to be implemented through the cultural test that calculates the percentage of the rebate given to producers.
The idea warrants some credit and exploration as Malta can always find better ways to get more bang for its buck. The bang it rightly seeks is growing its industry and increasing employment. However, it needs to proceed with caution when walking this tight rope. Trying to balance the generosity of its cash rebate with a very limited crew and talent base could lead to uncertainties abroad.
With minimal optimism, during early budgeting stages and important decision-making, when producers are still sitting in Los Angeles or London evaluating the financial pros and cons of each country, those planning their production several months ahead will be able to assume a minimum rebate of 20 per cent with a further five per cent being determined on the eventual quantity of local skills and local talent engaged. The situation should not be any less advantageous and the new rules might even be more generous.
Meanwhile, until this national policy is implemented towards the end of this year, producers will continue to receive a rebate of between 20 and 25 per cent depending on the standard ‘old’ cultural test and with a further two per cent if Malta's culture is portrayed adequately and positively on screen.
Malta's new film policy is also expected to "regulate" employment in the film industry. For decades, crews have enjoyed the option to work as freelancers or as employees. Producers, likewise, can choose according to existing legislation as applied for all other industries. However, Malta has some concerns about the film industry. Some of them are justified.
Firstly, Malta's publicly-funded recruiting and employment authority - Jobsplus - has never updated its computer software with titles of film crew positions. Furthermore, the nature of the film industry is not catered for within its existing regulations. This despite the fact that the industry has been very active and visible for over a decade.
Secondly, local crews are not organised enough to form an association that can establish certain conditions or principles with regard to overtime, turnaround, rates etc. A few select crew members complain about the need of rules though 'abuse' by productions is very isolated.
Thirdly, Malta's civil servants wish to see local film crews working on a payroll rather than by invoice, as freelancers do as self-employed, since the former involves withholding taxes and social security payments. Payroll is a surer way of ensuring all dues are received into the government's coffers and reduces the need of inspections.
Jobplus must finally recognise the film industry in its regulations and concessions. There is no doubt about the urgent need for this. But the matter about sick leave, employment bonuses etc., which select crew members wish to implement as mandatory, is a tricky issue. There are many developed film industries around the world that do not make it obligatory for producers to pay such fringe benefits. If the government were to impose such restrictions on international producers it risks increasing crew costs by up to nearly 20 per cent, unless crews are willing to lower their ‘employee’ compared to their ‘self-employed’ rates to allow for the fringe benefit payments forced onto producers.
Moreover, producers filming for only a few days do not want to be hit with the cumbersome rule of setting up a payroll system when everyone could easily be paid by invoice for a few days of work.
An alternative and simple solution is for ‘crew-hiring guidelines’ to be decided among all, perhaps through the Malta Film Commission until the crew base is willing to organise itself formally and professionally, even if film commissions are generally not regulating bodies.
Such guidelines can establish turnaround penalties and minimum pay rates according to the scale of the production. They should also include such obligations as health and safety measures present on construction sites and on set.
Also, through the government-appointed audit that is conducted for every cash rebate to producers, crew invoices can be selected sporadically for inspection to solve any concerns about tax evasion.
For those productions filming for a considerable length of time and not only for a few weeks, a payroll system would indeed be an efficient way that ticks all the boxes for all interested parties.
However, rather than remove existing options and make the film industry more restrictive than other industries, Malta can entice more locals to train and work in the industry and to choose the payroll system by offering a tax incentive such as a special final withholding tax rate that would start at 10 per cent and later increased to 15 per cent once the industry manages to stand on its feet.
A similar plan was suggested in a consultation session held in January and it is hopefully being given serious consideration during this important and much-needed policy-implemention process.
This tax incentive should be offered to all those working exclusively in film-making and who are willing to hold tight onto their seats during the rollercoaster ride offered by this very cyclical industry.
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The frequency of international filming in Malta increased tenfold over the last two decades, with a noticeable climb starting about 10 years ago after a cash rebate was introduced. The local servicing industry has also seen substantial growth but the lack of a serious national film policy led to this industry not catching up with the huge influx.
Over the past decade, several production service companies were registered but the number of local crews have not increased fast enough. Equipment houses and specialised film-related rental companies are also limited despite the growing popularity of the island as an international film destination.
The truth of the matter is that local film crews of a first-class nature exist only about one and a half deep. And, anyway, some department heads still cannot be sought locally.
Foreign producers bringing their productions to Malta do not wish to be the second or third one preparing or filming concurrently on the island unless they are ready to fly in a large contingent of foreign crew. Moreover, some positions need time to absorb local knowledge. And time is a luxury that seldom exists.
The lack of local crew or the 'clashing' of international productions - depending on how you may look at it - is indeed a serious problem that needs urgent attention. Orchestrating productions to reach the island's shores in a back-to-back fashion is, of course, an impossible feat.
When evaluating the qualified expenditure for an EU country’s rebate, EU policies discourage discrimination between citizens of different EU countries. However, Malta quite understandably prefers to rebate cash to producers utilising Maltese or local residents rather than EU crew members who do not reside in Malta and who are not forming and strengthening the local service industry, even if foreign crew members enable the economy to benefit from more accommodation, per diem and travel expenses.
Meanwhile, the island wants to keep the momentum of foreign film productions and all their direct and indirect benefits to the economy.
These factors place Maltese lawmakers between a rock and a hard place.
A national film policy, the first of its kind in the country, hopes to tackle this issue and several others. In short, Malta's priority - and no small challenge, at that - is to increase the local crew base and fast-track training opportunities while continuing to attract enough international work so that local crew members can finally sustain a full-time career.
With this in mind, the government intends to revise the financial package to give producers a bigger incentive, other than the obvious budget savings, when hiring more Maltese behind and in front of the camera. It is reported that this strategy is to be implemented through the cultural test that calculates the percentage of the rebate given to producers.
The idea warrants some credit and exploration as Malta can always find better ways to get more bang for its buck. The bang it rightly seeks is growing its industry and increasing employment. However, it needs to proceed with caution when walking this tight rope. Trying to balance the generosity of its cash rebate with a very limited crew and talent base could lead to uncertainties abroad.
With minimal optimism, during early budgeting stages and important decision-making, when producers are still sitting in Los Angeles or London evaluating the financial pros and cons of each country, those planning their production several months ahead will be able to assume a minimum rebate of 20 per cent with a further five per cent being determined on the eventual quantity of local skills and local talent engaged. The situation should not be any less advantageous and the new rules might even be more generous.
Meanwhile, until this national policy is implemented towards the end of this year, producers will continue to receive a rebate of between 20 and 25 per cent depending on the standard ‘old’ cultural test and with a further two per cent if Malta's culture is portrayed adequately and positively on screen.
Malta's new film policy is also expected to "regulate" employment in the film industry. For decades, crews have enjoyed the option to work as freelancers or as employees. Producers, likewise, can choose according to existing legislation as applied for all other industries. However, Malta has some concerns about the film industry. Some of them are justified.
Firstly, Malta's publicly-funded recruiting and employment authority - Jobsplus - has never updated its computer software with titles of film crew positions. Furthermore, the nature of the film industry is not catered for within its existing regulations. This despite the fact that the industry has been very active and visible for over a decade.
Secondly, local crews are not organised enough to form an association that can establish certain conditions or principles with regard to overtime, turnaround, rates etc. A few select crew members complain about the need of rules though 'abuse' by productions is very isolated.
Thirdly, Malta's civil servants wish to see local film crews working on a payroll rather than by invoice, as freelancers do as self-employed, since the former involves withholding taxes and social security payments. Payroll is a surer way of ensuring all dues are received into the government's coffers and reduces the need of inspections.
Jobplus must finally recognise the film industry in its regulations and concessions. There is no doubt about the urgent need for this. But the matter about sick leave, employment bonuses etc., which select crew members wish to implement as mandatory, is a tricky issue. There are many developed film industries around the world that do not make it obligatory for producers to pay such fringe benefits. If the government were to impose such restrictions on international producers it risks increasing crew costs by up to nearly 20 per cent, unless crews are willing to lower their ‘employee’ compared to their ‘self-employed’ rates to allow for the fringe benefit payments forced onto producers.
Moreover, producers filming for only a few days do not want to be hit with the cumbersome rule of setting up a payroll system when everyone could easily be paid by invoice for a few days of work.
An alternative and simple solution is for ‘crew-hiring guidelines’ to be decided among all, perhaps through the Malta Film Commission until the crew base is willing to organise itself formally and professionally, even if film commissions are generally not regulating bodies.
Such guidelines can establish turnaround penalties and minimum pay rates according to the scale of the production. They should also include such obligations as health and safety measures present on construction sites and on set.
Also, through the government-appointed audit that is conducted for every cash rebate to producers, crew invoices can be selected sporadically for inspection to solve any concerns about tax evasion.
For those productions filming for a considerable length of time and not only for a few weeks, a payroll system would indeed be an efficient way that ticks all the boxes for all interested parties.
However, rather than remove existing options and make the film industry more restrictive than other industries, Malta can entice more locals to train and work in the industry and to choose the payroll system by offering a tax incentive such as a special final withholding tax rate that would start at 10 per cent and later increased to 15 per cent once the industry manages to stand on its feet.
A similar plan was suggested in a consultation session held in January and it is hopefully being given serious consideration during this important and much-needed policy-implemention process.
This tax incentive should be offered to all those working exclusively in film-making and who are willing to hold tight onto their seats during the rollercoaster ride offered by this very cyclical industry.
Join us on Facebook to get instant updates on all news and film jobs
This newspaper reports an announcement for incentives and a national policy to be in place by 2001. The incentives were introduced in 2005. The year 2016 saw the first published comprehensive policy-making document for the film industry followed by public consultation sessions.