Photo credit: Academy Award Winner by Davidlohr Bueso
Yesterday, Ministry of Finance published the Rules for Applying the Tax Breaks for contributions to Mexican films. This tax break allows any Mexican company to contribute with an amount no higher than 10% of their income tax of previous fiscal year to Mexican films, and consider this contribution as a tax deduction.
The main requirements for applying this tax break are:
1. That 70% of expenses of the project are made in Mexico and 70% of staff are Mexican nationals.
2. Producers must apply online for this tax break sending the digital file with diverse corporate and financial information.
3. Applicant and contributor must be in good standing in tax obligations.
4. Applications are only be received during April and May, and decided within 50 working day as from submitted.
5. Producer must file certain reports after the tax break is granted, i.e. progress of the project, release date, etc.
The filings and report obligations of this tax break are certainly not making this deduction a blockbuster. However, for Mexican film industry could open opportunities for selling BTL/ATL marketing services or awareness campaigns.
This, combined with (1) an export incentive program (IMMEX), (2) foreign capital for film ventures, and (3) a content strategy for selling films as independent content to TV networks and/or internet VOD services, could make a great business model.
After all, in the age of ideas, content is king.