Republic of the Philippines
HOUSE OF REPRESE
Quezon City

NTH CONGRESS.
t Regular Session

HOUSE BILL,

Introduced by Hon. SIGFRIDO R. TINGA

EXPLANATORY NOT

The bill seeks to make the Philippine arts and entertainment industry more
competitive with the provision of the necessary tax breaks to the industry. The
bill seeks to give corporate tax breaks and certain importation privileges to the
local film and entertainment industry, and to exempt venue operators showing
local films, as well as art and music events
payment of amusement tax.

aturing local artists, from the

The Philippine arts and entertainment industry finds itself hard pressed to
compete in a world of endless entertainment choices. Foreign films and
entertainment products continue to improve as evidenced by the growth of their
market share here in the Philippines, as well as the abundance of international
movies and entertainment options from all over the world.

Home entertainment, from video games to home movies to the internet, are
also cornering time that we used to spend on watching movies.

» local cultural
events and the like.

‘The ease of digital piracy and lack of copyright protection have also taken
their toll on both the local film and music industry. Musicians who have lost
opportunities to earn on royalties from album sales are now dependent on making
a living from live performances. Filmmakers are also wary of making big budget
movies only to see them hawked on the sidewalks, a day after their theatrical
release. The dramatic decrease from over 200 movies produced locally per year
to less than 30 is quite a telling sign of the health of the industry.

Last and not the least is the uncompetitive local environment brought about
by the heavy taxation on the industry. There is the amusement tax, the value
added tax, as well as the corporate income tax. The over taxation on their gross
income makes it difficult for the industry to compete against better-funded and
institutionally supported foreign products. In addition, supporting the local film
industry by exempting them from the amusement tax, would have very little effect

on the government’s financial state, since there currently is hardly any industry to
tax anyway



‘The arts and entertainment industry, particularly film and music, is a hit or
miss business. There is currently no room for experimentation and risk taking,
‘he result of this is that most people feel they will lose their shirts if they invest in
the entertainment industry. The industry is in dire straits, leading both artists and

producers to look elsewhere to exercise their craft or find alternate forms of
livelihood.

‘The Philippines is a country of creative people, whose potential is being
stifled by the lack of institutional support in what has become a_ highly
competitive environment. It is high time for the state to be proactive and provide.
all the necessary legislative and financial support to ensure that
survives and flourishes.

ilipino culture

In view of the foregoing consideration, approval of this measure is urgently
recommended.

sc RIQOR. TINGA
tayive
iva Taguig City

Repre

ne



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. __ 8200

Introduced by Hon, SIGFRIDO R. TINGA,

AN ACT PROMOTING THE LOCAL ARTS AND ENTERTAINMENT
INDUSTRY BY PROVIDING THE LOCAL MOVIE AND FILM
INDUSTRY CORPORATE TAX BREAKS AND EXEMPTING VENUE
OPERATORS FROM THE PAYMENT OF AMUSEMENT TAX WHEN
SHOWING LOCALLY PRODUC
FEATURING FILIPINO ARTISTS,

ED FILMS AND MUSIC EVENTS:

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:

SECTION 1. Short Title. — This Act shall be known as the “Local
Arts And Entertainment Industry Promotions Act.”

SECTION 2. - Declaration of Policy. — It is hereby declared policy of the
State to protect the local arts and entertainment industry and raise its
competitiveness in the international marketplace, as well as keep the industry
afloat despite the threat of digital piracy, by providing them the necessary income
tax breaks, and exempting exhibitors from the payment of amusement tax thus

assisting producers, film companies

, and local artists in reducing their costs,
improving the quality of their craft, and making their product more competitive in
the global marketplace.

SECTION 2. — Tax Exemption. ~ Any local producer of a film or movie
utilizing all local staff may claim the total expenses incurred in the execution and

showing of the film: Provided, that the claim for exemption shall be allowed as


deductions from the company’s gross income for the same taxable year: Provided
further, that the total amount of the claimed tax exemption shall be included in
their gross income or revenues und shall be subject to proper documentations and
to the provisions on allowable deductions covered by Chapter IX of the National

Internal Revenue Code (NIRC) as amended.

SECTION 3. Section 140 of Republic Act No. 7160, otherwise known as

the Local Government Code of 1991 is hereby amended to read as follows:

“SECTION 140, Amusement Tax — (a) The province may levy an

amusement tax, to be collected from the proprietors, lessees, or
operators of theaters, cinemas, concert halls, circuses, boxing stadia
and other places of amusement at a rate of not more than thirty
percent (30%) of the gross receipts from admission fees,
PROVIDED, THAT THIS IMPOSITION SHALL, NOT APPLY TO
LOCALLY PRODUCED FILMS THAT FEATURE A
PREDOMINANTLY FILIPINO CAST, ‘THAT HAVE BEEN
CLASSIFIED BY THE MOVIE AND TELEVISION REVIEW AND.
CLASSIFICATION BOARD (MTRCB) AS FIT FOR
COMMERCIAL VIEWING.

XXX

(c) The holding of LOCALLY PRODUCED. operas, concerts,
dramas, recitals, painting and art exhibitions, flower shows, musical
programs, literacy and oratorical presentations —_[(except)
INCLUDING pop, rock or similar concerts [)] FEATURING
FILIPINO ARTISTS shall be exempt from the tax herein imposed.

SECTION 4. Section 109 of Republic Act No. 8424, otherwise known as
the National Internal Revenue Code, as amended by Republic Act No. 8424,

otherwise know as the National Internal Revenue Code, as amended by Republic

Act No. 9337, is hereby amended to read as follows:

“SECTION 109. Exempt Transactions — (1) Subject to the provisions

of subsection (2) hereof the following transactions shall be exempt

4


trom the value added tax:

IMPORTATION OF RAW MATERIALS AND EQUIPMENT BY
PERSON: jAGED IN THE BUSINESS OF MAKING FILMS
AND OTHER CINEMATOGRAPHIC WORK, FOR USE IN
PRODUCING SUCH FILMS, INCLUDING BUT NOT LIMITED
TO DIGITAL MEDIA, PROVIDED THAT ‘THE BUREAU OF
INTERNAL REVENUE SHALL IAVE THE EXCLUSIVE RIGHT
TO DETERMINE, AFTER PRIOR CONSULTATION WITH
MEMBERS OF THE FILM INDUSTRY, THE RAW MATERIALS.
AND EQUIPMENT THAT SHALL BE EXEMPT FROM VALUE
ADDED TAX

SECTION 5. - Implementing Rules and Regulations, — The Chairman of
the MTRCB shall, in consultation with the film producers in the Philippines and
the Bureau of Internal Revenue (BIR), within sixty (60) days from the effectivity
of this Act, issue the necessary rules and regulations for the effective
implementation of this Act.

SECTION 6. Repealing Clause. ~ A\l laws, decrees, executive orders,
proclamations, rules and regulations, and other issuances, or parts thereof, which
are inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SECTION 7. — Effectivity. - This Act shall take effect fifteen (15) days

after publication in the Official Gazette or in two (2) national newspapers of
general circulation.

Approved.