Arkansas Administrative Code › Agency 168 - Arkansas Economic Development Commission › Rule 168.00.13-002 - Digital Product and Motion Picture Industry Development Act

Current through Register Vol. 49, No. 6, June, 2024
I.
Introduction
To encourage growth in Arkansas's digital product and motion
			 picture industry, Act 816 of 2009 was enacted by the
			 87th General Assembly and amended in 2013. The
			 legislation's purpose is to cultivate the industry by offering financial
			 incentives to foster the development of the digital and traditional film
			 industry in Arkansas. See Arkansas Code Annotated § 15-4-2001 et
			 seq.
For more information, please contact:
Arkansas Economic Development Commission
Arkansas Film Office
900 West Capitol
Little Rock, AR 72201
(501) 682-7326
II.
Definitions
(1) "Application for rebate" means the
		  document required by the Film Office to begin the process for obtaining a
		  rebate under the Digital Product and Motion Picture Industry Development
		  Act;
(2) "Below-the-line employees"
		  means:
(A) employees involved with a motion
		  picture production including but not limited to:
(i) Casting assistants,
(ii) Costume design,
(iii) Gaffers,
(iv) Grips,
(v) Location managers,
(vi) Production assistants,
(vii) Set construction staff, and
(viii) Set design staff.
(B) "Below-the-line employees" does not
		  include directors and producers;
(3) "Commission" means the Arkansas Economic
		  Development Commission;
(4) "Film"
		  means a single media or multi-media production that is fixed on film, digital
		  medium, videotape, computer disc, laser disc, or similar delivery
		  medium;
(5) "Film and digital
		  product" means video images or other visual media entertainment content in
		  digital format, film, or videotape, provided the program meets all the
		  underlying criteria of a qualified production including but not limited to the
		  following:
(A) Motion pictures,
(B) Documentaries,
(C) Long-form programs,
(D) Specials,
(E) Mini-series,
(F) Series,
(G) Music videos,
(H) Television programming,
(I) Interactive television,
(J) Interactive games,
(K) Videogames,
(L) Commercials,
(M) Digital media for distribution or
		  exhibition to the general public, or
(N) Trailer, pilot, video teaser, or demo
		  created primarily to stimulate the sale, marketing, promotion, or exploitation
		  of future investment;
(6) "Film Office" means the division of the
		  Arkansas Economic Development Commission charged with the responsibility of
		  promoting and assisting the digital content industry in Arkansas in order to
		  enhance Arkansas as a land of opportunity for digital and motion picture
		  filmmaking;
(7) "Film production
		  company" means a corporation, individual, limited liability company or
		  partnership that produces one (1) or more films or any part of a
		  film;
(8) "Financial institution"
		  means any bank or savings and loan in the state which carries Federal Deposit
		  Insurance Corporation Insurance;
(9) "Highly compensated individual" means:
(A) An individual who directly or indirectly
		  receives compensation in excess of five hundred thousand dollars ($500,000) for
		  personal services with respect to a single production.
(B) An individual receives compensation
		  indirectly when a production company pays a personal service company or an
		  employee-leasing company that pays the individual;
(10) "Interactive television" means a
		  television production in which the viewer's action(s) may:
(A) Affect the program being watched,
		  or
(B) Affect the outcome of the
		  production;
(11)
		  "Post-production" means a final stage in the production of film or digital
		  content occurring after the action has been filmed or videotaped, including but
		  not limited to:
(A) Dialogue
		  replacement,
(B) Sound
		  editing,
(C) Addition or deletion
		  of special effects,
(D) Editing
		  music,
(E) Beginning and end
		  credits,
(F) Negative
		  cutting,
(G) Soundtrack
		  production,
(H) Dubbing,
(I) Subtitling,
(J) Addition or deletion of sound or visual
		  effects,
(K) Soundtrack production,
"Post-production" does not include expenditures for advertising,
			 marketing, or distribution;
(12) "Postproduction costs" means all
		  expenditures associated with the post-production phase of a state-certified
		  production within the state;
(13)
		  "Production" means:
(A) The process of
		  producing a type of entertainment content and includes film and digital content
		  product.
(B) "Production" shall not
		  include:
(i) An ongoing program created
		  primarily as news, weather, or financial market reports;
(ii) A production containing any material or
		  performance that is obscene;
(iii)
		  A production deemed an infomercial; or
(iv) Sexually explicit productions as defined
		  in 18 U.S.C. § 2257, as it existed on January 1, 2009;
(14) "Production
		  company" means a corporation, partnership, limited liability company, or other
		  business entity engaged in the business of producing qualified productions and
		  is registered with the Arkansas Secretary of State to engage in business in
		  Arkansas;
(15) "Qualified
		  production costs" means costs associated with the development, preproduction,
		  production, or postproduction of a qualified production within the state,
		  including but not limited to:
(A) Per diem
		  expenditures by the cast or crew for meals and lodging when accompanied by
		  receipts,
(B) Costs associated with
		  original music compositions produced by an Arkansas resident to be used as
		  incidental music, the score, or the soundtrack in film or video
		  games,
(C) Arkansas residents for
		  labor, wages, fees, talent or management,
(D) Arkansas businesses for personal
		  services,
(E) The story and
		  scenario used in the production,
(F) Set construction,
(G) Set operations,
(H) Wardrobe and accessory
		  services,
(I)
		  Photography,
(J) Sound,
(K) Lighting,
(L) Editing related services,
(M) Rentals of equipment and
		  facilities,
(N) Leasing of motor
		  vehicles,
(O) Chartering of
		  aircraft through an Arkansas-based businesses for in-state transportation
		  attributed to the production,
(P)
		  Commercial airfare purchased through Arkansas-based travel agencies for travel
		  to and from Arkansas attributed to the production,
(Q) Insurance and bonding costs,
(R) Costs to option or purchase intellectual
		  property, including without limitation books, scripts, music, or trademarks
		  relating to the development or purchase of a script, screenplay, or format if:
(i) The intellectual property was produced
		  primarily in Arkansas or the creator of the intellectual property is a resident
		  of Arkansas;
(ii) At least
		  seventy-five percent (75%) of the subsequent film or digital content is
		  produced in Arkansas; and
(iii) The
		  production expenses or costs for the optioning or purchase are less than
		  twenty-five percent (25%) of the production expenses or costs incurred in
		  Arkansas. The expenses or costs include all expenditures associated with the
		  optioning or purchase of intellectual property, including option money, agent
		  fees, and attorney fees relating to the transaction, but do not include
		  deferrals, deferments, royalties, profit participation, or recourse or
		  nonrecourse loans which the eligible production company may negotiate in order
		  to obtain the rights to the intellectual property;
(S) Other costs of the production in
		  accordance with generally accepted entertainment industry practices,
(T) Fringe contributions being paid for work
		  performed in Arkansas, including:
(i) Health
		  benefits,
(ii) Pension
		  contributions,
(iii) Welfare
		  contributions,
(iv) Stipends,
		  and
(v) Living
		  allowances.
(U) Food
		  catering services. When a production company hires a food catering service
		  company that is located outside the state, payments otherwise allowable that
		  are made by the out-of-state food catering service to food businesses located
		  in Arkansas shall be allowed as eligible expenditures
(V) "Qualified production costs" does not
		  include:
(i) The optioning or purchase of
		  intellectual property that is not used in the production project;
(ii) Media buys, promotional events, or gifts
		  or public relations associated with the promotion or marketing of any qualified
		  production;
(iii) Deferred,
		  leveraged, or profit participation costs relating to any and all personnel
		  associated with any and all aspects of the production, including, without
		  limitation, producer fees, director fees, talent fees, and writer
		  fees;
(iv) Amounts paid to persons
		  or businesses as a result of their participation in profits from the
		  exploitation of the qualified production; and
(v) Payments for penalties or fines, payments
		  to nonprofit organizations, and payments to federal and state entities that do
		  not pay state taxes;
(16) "Resident" means natural persons and
		  includes for the purpose of determining eligibility for the rebate incentive
		  provided by this subchapter, a person domiciled in Arkansas and who maintains a
		  permanent residence within the state and spends at least six (6) months of the
		  taxable year within the state;
(17)
		  "Season" means production of at least ten (10) episodes of a television
		  series;
(18) "State-certified
		  production" means a qualified production produced by an eligible production
		  company that is:
(A) In compliance with
		  established rules and regulations of the Digital Content and Motion Picture
		  Industry Development Act;
(B)
		  Authorized by the Film Office to conduct business in this state; and
(C) Approved by the Film Office as qualifying
		  for a production rebate under this section;
(19) "Television mini-series" means a limited
		  run program of more than two (2) and less than the thirteen (13) part-season or
		  half-season block associated with serial or series programming;
(20) "Television programming" means a long-
		  or short-form narrative production of a television series, television
		  mini-series or television special that is intended for commercial broadcast.
Television programming
does not include
programs
			 created primarily as:
(i) News
		  reports,
(ii) Weather
		  reports,
(iii) Financial market
		  reports,
(iv) Current
		  events,
(v) Sporting
		  events,
(vi) Award shows,
(vii) Gala events,
(viii) Fundraising events,
(ix) Marketing a product or
		  service,
(x) Corporate training,
		  or
(xi) Corporate
		  advertising;
(21)
		  "Television series" means at least six (6) hours of television programming
		  exhibited by a television station or network;
(22) "Television specials" means major
		  dramatized presentations broadcast during times normally occupied by episodes
		  of one or more weekly television series.