Arkansas Administrative Code › Agency 003 - DEPARTMENT OF COMMERCE › Division 19 - Arkansas Economic Development Commission › Rule 003.19.20-003 - Digital Product and Motion Picture Industry Development Act

Current through Register Vol. 49, No. 6, June, 2024
(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 amended in 2013 and 2019.
				Amended and codified at ACA §
									15-4-2001
				et seq, 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.
For more information, please contact:
Arkansas Economic Development Commission
Arkansas Film Office
1 Commerce Way, Suite 601
Little Rock, AR 72202
(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,
"Post-production" does not include expenditures for
				advertising, marketing, or distribution;
(12) "Post-production costs" means all
			 expenditures incurred in the state 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) 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) A production
			 containing any material or performance that is obscene; or
(xii) 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 six (6) 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 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
			 Arkansas Economic Development Commission as qualifying for a discretionary
			 production rebate under this section;
(19) "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;
(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;
(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.