iF REPRESENTATIVES:
| RECCIVED

Republic of the Philippines
HOUSE OF REPRESENTATIVE:
Quezon City

pare 08 AUG 2016

wae 20

SEVENTEENTH (17") CONGRE
First Regular Session

House Bill No. 2624

Introduced by: Representative Jose L. Atienza, Jr.

EXPLANATORY NOTE

Our film industry used to be one of the fastest growing industries
in the Philippines and in the world as well. We used to be recognized in
the world in terms of creativity, originality, and talent in our movies.
From an average of 300 films a year, we have dropped to making less
than 50 films a year. Our film industry is moribund. At present, only a
few films make a profit in the Philippine movie industry. Many Filipinos
are more aware of foreign films than the local ones especially now in the
internet age where people can just download the newest foreign films in
their computers and let the local movies run dry in the local movie

houses.

‘These realities plus the rising cost of movie production have made
it harder for start-up film companies to enter the industry, and thereby has
watered down competition and improvement in the whole film industry.
The industry needs subsidies and a tax break to be able to bounce back

and be competitive once more.


Our writers, directors, and producers are still as topnotch as before,
and can still compete with their counterparts in international markets.
‘And because of the good reviews and many standing ovations received
now by Philippine Films in international film festivals, such as the
Cannes Film Festival, we can easily compete with hollywood-produced
films. We just need to help the Philippine film industry right now in

retracing its path to profitability and to greatness.

This Act seeks to provide a five (5) year tax holiday for the film
industry — including the purchase of equipment, production of films, and
exhibition of said films starting on the year of its approval, in order for
the whole movie industry of the Philippines to recover and ispprove,

especially with the entry of new players.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

ENTEENTH (17") CONGRESS
First Regular Session

4

House Bill No&

Introduced by: Representative Jose L. Atienza, Jr.

AN ACT
PROVIDING A FIVE (5) YEAR TAX HOLIDAY FOR THE FILM
INDUSTRY BY AMENDING REPUBLIC ACT NO. 9167,
OTHERWISE KNOWN AS “AN ACT CREATING THE FILM
DEVELOPMENT COUNCIL OF THE PHILIPPINES, DEFINING
ITS POWERS AND FUNCTIONS, APPROPRIATING FUNDS
THEREFOR, AND FOR OTHER PURPOSES”

Be it enacted by the Senate and the House of Representatives in C Jongress
assembled:

SECTION 1. Short Title. - This Act shall be known as the “Philippine
Film Industry Tax Holiday Act of 2016.”

SEC. 2. Section 12 of Republic Act 9167 is hereby amended to read as

follows:

“Section 12. Grading of Films. — The grading of films by the
Cinema Evaluation Board shall be subject to the following

provisions:

(a) Pre-qualification procedures and requirements. - The

Council shall prescribe pre-qualification procedures and


requirements for application for grading: Provided, That
enly ALL films whose premiere screening shall be held in
the Philippines, and those which have not had any previous
theatrical release, free television broadcast, cable broadcast
or video release in any commercial medium anywhere in the
world shall be qualified for grading by the Board: Provided,
further, That the Board shall evaluate and grade erly ALL
feature film that are intended for theatrical and other forms
or exhibition that will charge admission fees and which are
at least eighty (80) minutes in length and that the producer
shall submit his/her film for grading at least seven (7)

calendar days before its scheduled playdate.”

SEC. 3. Section 13 of Republic Act 9167 is hereby amended to read as

follows:

ction 13. Privileges of Graded Films. - Films which have
obtained an "A" or "B" grading from the Council pursuant to
Sections 11 and 12 of this Act shall be entitled to the following

privileges

a. Amusement tax reward. - A grade "A" or "B" film shall
entitle its producer to an incentive equivalent to the

amusement tax imposed and collected on the graded films by

cities and municipalities in Metro Manila and other highly
urbanized and independent component cities in the
Philippines pursuant to Sections 140 and 151 of Republic
Act No. 7160 at the following rates:

1. For grade "A" films - 100% of the amusement tax

collected on such films; and


2. For grade "B" films. - 65% of the amusement tax
collected on such films. The remaining thirty-five

(35%) shall accrue to the funds of the Council.

B. TAX HOLIDAY. - The Council may call for a tax

holiday during a downturn in the local industry. The tax

holiday will follow these guidelines:

(a) Tax and Duty Exemption on Capital
Equipment. — Importation of machinery and
equipment and accompanying spare parts directly
related to the making of films shall be exempt to
the extent of one hundred percent (100%) of the
customs duties and national internal revenue tax

payable thereon.

(b) A domestic manufacturer of any of the articles
enumerated therein shall be entitled to a tax credit
equivalent to one hundred percent (100%) of the
national internal revenue taxes, customs duties and
levies actually paid on the raw materials used in
the manufacture of the article. The purchaser of
such article shall likewise be entitled to a tax credit
of one hundred percent (100%) of the value of the
National Internal Revenue taxes, customs duties
imposed thereon under Section 104 of the Tariff
and Customs Code of 1978, as amended, and levies
provided by law or presidential decree had such

article been imported.


c. Tax Exemption on rental of equipment and on
post-production expenses such as editing and
marketing of films. There shall be a one hundred
percent (100%) tax exemption on the rental of
equipment, editing fees, and marketing fees in
relation to the production and needed post-

production events for the promotion of the films.

SEC. 4. As used in this Act, the term domestic manufacturer shall mean a
citizen of the Philippines, a partnership or any other association organized
under Philippine laws, with at least sixty percent (60%) of its capital
owned and controlled by citizens of the Philippines; a corporation or
cooperative organized under Philippine laws with at least sixty percent
(60%) of its capital stock outstanding and entitled to vote owned and held
by citizens of the Philippines, and with at least sixty percent (60%) of the

members of its Board of Directors being citizens of the Philippines.

SEC. 5. The Film Development Council of the Philippines (FDCP) and
the Department of Finance shall formulate and publish guidelines for the
implementation of this Act in the Official Gazette and in any newspaper

of general circulation within ninety (90) days after its approval.

SEC. 6. Repealing Clause. ~ All laws, rules, regulations, orders, circulars
and memoranda inconsistent with this Act are hereby repealed of

modified accordingly.

SEC 7. Effectivity. — This Act shall take effect immediately upon

approval.

Approved.