Arkansas Administrative Code › Agency 003 - DEPARTMENT OF COMMERCE › Division 19 - Arkansas Economic Development Commission › Rule 003.19.22-001 - Digital Product & Motion Picture Industry Development Rule

Current through Register Vol. 49, No. 6, June, 2024
Digital Product and Motion Picture Industry Development
				Act (Act 816 of 2009, as amended)
Rules
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
				codified at ACA §
									15-4-2001
				et seq. The purpose of the Act is to cultivate the industry by offering
				financial incentives to foster the development of the digital product and
				traditional film industry in Arkansas.
II.
Definitions
(1) "Application for a rebate or a tax
			 credit" means the document required by the Film Office to begin the process for
			 obtaining a tax incentive 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)
			 "DF&A" means the Department of Finance Administration;
(5) "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;
(6) "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;
(7) "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;
(8) "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;
(9) "Financial institution"
			 means any bank or savings and loan in the state which carries Federal Deposit
			 Insurance Corporation Insurance;
(10) "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;
(11) "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;
(12)
			 "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,
"Post-production" does not include expenditures for
				advertising, marketing, or distribution.
(13) "Post-production costs" means all
			 expenditures incurred in the state associated with the post-production phase of
			 a state-certified production within the state;
(14) "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) News reports;
(ii) Weather reports;
(iii) Current events;
(v) Sporting events;
(vi) Fundraising events;
(vii) Gala events;
(viii) Marketing a product or
			 service;
(ix) Corporate
			 training;
(x) Corporate
			 advertising;
(xi) Non-scripted
			 reality show;
(xii) A production
			 containing any material or performance that is obscene; or
(xiii) Sexually explicit productions as
			 defined in
			 18 U.S.C §
												2257, as it existed on January 1,
			 2009;
(15)
			 "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;
(16) "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, signed by the production
			 company and the cast or crew member, evidencing payment of the per
			 diem,
(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 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;
(17) "Resident" means natural persons and
			 includes; for the purpose of determining eligibility for the rebate incentive
			 provided by this program, 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;
(18)
			 "Season" means production of at least six (6) episodes of a television
			 series;
(19) "State-certified
			 production" means a qualified production produced by an eligible production
			 company that is:
(A) In compliance with the
			 established rules 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 executive director of the
			 Commission as qualifying for a discretionary production tax incentive under
			 this section;
(20) "Tax
			 Incentive" means a rebate under A.C.A. §
									15-4-2008
			 or a tax credit under § 15-4-2012;
(21) "Television mini-series" means a limited
			 run program of more than three (3) hours of programming or half-season block
			 associated with serial or series programming;
(22) "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;
(23) "Television series"
			 means at least six (6) hours of television programming exhibited by a
			 television station or network;
(24)
			 "Television specials" means major dramatized presentations broadcast during
			 times normally occupied by episodes of one or more weekly television
			 series.
(25) "Veteran" means an
			 individual who:
(A) Was honorably discharged
			 from a tour of active duty, other than active duty for training only, with the
			 United States Armed Forces; or
(B)
			 Has served honorably in the National Guard or reserve forces of the United
			 States Armed Forces for at least (6) years, regardless of whether the
			 individual has been discharged;
(26) "Veteran-owned small business" means a
			 business:
(A) With profits of less than one
			 million dollars ($1,000,000);
(B)
			 In which at least one (1) veteran owns more than fifty percent (50%) of the
			 business; and
(C) That has its
			 principal place of business or its headquarters in Arkansas.