II. Film Industry Authorities

The law created the Intersectoral Council for the Promotion of Cinematographic Activity (CIPAC) and the General Directorate of Cinema (DGCINE). CIPAC is hierarchically superior; DGCINE is the operating authority that administers the legal and technical aspects of the regime, including film permits and the qualification of productions for incentives.

III. National Film Information Registry (SIRECINE)

Law 108-10 created the Dominican Cinema Information Registry System (SIRECINE) under DGCINE. SIRECINE keeps records of the agents and sectors participating in Dominican film activity, of the commercialization of film works through the different media and devices, and of attendance levels at movie theaters.

To qualify for the incentives, Dominican production agents must first register with SIRECINE.

IV. Qualifying for the Tax Incentives

Persons who administer, support, promote or develop cinematographic and other audiovisual works may benefit from the incentives of Law 108-10 where the work: (1) holds a film permit; (2) carries a liability insurance policy covering damages to third parties; (3) is registered with SIRECINE (except foreign films produced in the DR); (4) spends at least 20% of its budget in the DR or has Dominican capital of not less than 20% of its budget; and (5) meets the minimum Dominican participation requirements.

Foreign films, series, TV miniseries, telenovelas, documentaries and music videos totally or partially produced in the DR benefit from the incentives after qualification by DGCINE under the law and its regulations.

V. Incentives for Investment in Dominican Cinema

Persons who invest in entities whose exclusive purpose is the production of previously approved Dominican feature films may deduct the invested amount from their income tax for the fiscal period of the investment. Following the amendment introduced by Law 253-12, the deduction is capped at 25% of the income tax payable for the period.

The original wording of Law 108-10 allowed a 100% deduction of the invested value; investors modeling a Dominican film investment today should apply the post-2012 cap and confirm the treatment with DGCINE and the DGII before committing.

VI. Transferable Tax Credit

Natural or legal persons producing Dominican or foreign film works in DR territory may benefit from a transferable tax credit equal to 25% of all qualifying expenditures incurred in the DR (Art. 39, Law 108-10, as amended). The credit may be applied against the producer’s income tax or transferred to another natural or legal person for the same purpose.

For foreign productions, a minimum local expenditure threshold (US$500,000) and minimum participation of Dominicans or Dominican residents apply, as determined by the law and DGCINE regulations.

The transferable Art. 39 credit is the incentive that made the DR a leading regional filming destination; because the credit is monetized by transfer to local taxpayers, producers should line up the transferee and DGII procedures as part of the production’s financing plan.

VII. Other Tax Benefits

Law 108-10 established time-limited exemptions counted from its entry into force, including a 10-year income tax exemption for persons domiciled in the DR rendering technical services to DGCINE-approved productions, ITBIS exemption for pre-production, production and post-production goods and services of approved works, a 15-year income tax exemption for the establishment and operation of film and recording studios, and duty-free importation of studio equipment during the first 10 years. The original 10- and 15-year windows, counted from 2010, have now lapsed; the currently available benefits, principally the Art. 39 transferable credit and the ITBIS treatment of approved productions, should be confirmed with DGCINE for each project.

Temporary importation: with a filming permit issued by DGCINE, consumable and non-consumable goods and equipment required for filming may be temporarily imported for up to six (6) months, extendable, provided all imported goods are exported at the end of the term.

VIII. The Filming Permit

Persons interested in the incentives of Law 108-10 must apply to DGCINE for a filming permit for each cinematographic or audiovisual work. The permit is issued free of charge, is valid for two (2) years and is renewable.

Supporting materials and copies of Dominican or foreign feature films exported or returned to the country do not pay taxes, levies or duties.

This publication is provided for informational purposes only and not as legal advice. Any transaction related to any of the described aspects shall require advice and be specifically consulted with the Firm in advance. © Arthur & Castillo. All Rights Reserved. Next