Written by Malcolm Scerri-Ferrante on Jan 31, 2023. Posted in Contributors

Sustaining the film cash rebate

Two decades ago, countries began to compete for the hosting of international filming by creating a scheme whereby foreign producers are partially refunded for their monies spent in the country.


Government appointed economists calculated the “multiplier effect’ of the monies brought in by foreign productions, how they stimulated economies and how much taxation would be created down the line to render such schemes sustainable.


In 2005 Malta jumped onto this bandwagon and began offering a refund of 15% to foreign producers. The rules ensured that refunds are given only on expenditures which ultimately generated, directly or indirectly, an income into government’s coffers. In the end it was a win-win situation: Producers got to receive a refund after the filming is done and the government got to fill up its coffers whilst creating jobs and keeping voters happy.


Fast forward a decade. The frequency of filming increased globally so countries began to compete even more fiercely by increasing their refunds. Malta, rightly so, joined the craze and raised its cash rebate to a generous 40 percent.


Image courtesy of Universal Pictures


This is arguably one of the best refunds being offered worldwide, not only because of the percentage but because of one exceptional fact: The refund is granted also on expenditure that is not spent in Malta.


Aidan Elliott, the producer of Ridley Scott’s upcoming “Napoleon” was publicly quoted as describing Malta’s cash rebate as “the most generous in the world”. He went on to say “We took around 500 people to Malta and we were able to get the rebate on all of those people and that equipment”.


On one hand this incentive is helpful when considering the island’s size limits the abundance of local crews and also considering the local film infrastructure is not strong enough to provide equipment packages to larger productions. Both these factors are a disincentive to foreign productions and need to be somewhat countered.


“The fall of the cash rebate will spell disaster for the film servicing industry.”


Image courtesy of Warner Media


The problem is that 40% on foreign expenses cannot be offered forever, especially when Malta, like at least half of the world, is being forced to reign in government expenses and prepare itself for inflationary and recessionary effects. Numbers crunching will show that the generous handouts, whilst justified in the past as a temporary boost, are not sustainable. With minimal pessimism policy makers will then be tempted to scrap the scheme. The fall of the cash rebate will spell disaster for the film servicing industry.


It is time to make the scheme sustainable if its survival is to be assured. Malta needs to tighten the belt by limiting (or so called “capping”) the refund on foreign crew and foreign entities which are not being paid in Malta and neither resulting in any local tax. The economic principle of the “multiplier effect” needs to be put back in hard focus as the framework within which the scheme must continue to exist.


This way when a big budget film decides to shoot in Malta and for example spends five millions euros in Malta and six millions euros on foreign crew and foreign equipment brought to Malta, taxpayers would no longer be giving a big portion of a refund on the six million but rather on the five million, the monies that actually made it into the island’s economy. One must also be careful by differentiating between the “money spent on the shoot” and “the money brought into Malta” even if the former figure makes soundbites sound better.


By intelligently creating limits on foreign costs Malta would still be fully supporting the low to medium budget productions and, if anything, giving them further incentive to use local resources. These type of productions are the life-link of our industry. Meanwhile the cap would be limiting (not removing) the cash handed out to larger productions which can still afford coming to Malta, especially the big Hollywood-type films, which tend to bring hundreds of crew and equipment from abroad.


Image courtesy of James MInchin


The exception to setting the limits could remain with films which portray Malta as Malta (such as Jurassic World) and whose high profile actors can give assurances, albeit no guarantees, of a successful worldwide distribution and some great advertising.


By tweaking the refund scheme before it is too late, government will ensure its survivability and moreover save several millions, a portion of which can be granted to indigenous film productions, aka local filmmakers, especially those in co-production agreements with other countries. Government would be boosting another section of the industry that promotes Maltese culture and locations to international audiences, whilst still saving money and, most importantly, making an important scheme financially sustainable.


Thanks to the aggressive promotion and handouts of the Malta Film Commission, Malta is on the global map of international filmmakers. It is now time to become confident that filmmakers will still want to come to Malta to enjoy the island’s locations, sun, sea, its political neutrality and above all its friendly and experienced crews.


Meanwhile a national film policy could focus on training film crews (in various production and technical departments, not just creative or construction), creating tax incentives for locals to join this very cyclical and sometimes insecure industry, and stimulating private investment in film infrastructure. Then the industry will become “strong” as we like to assume it is but actually is not, not when several productions are preparing or shooting at the same time.


Above all, Malta will not need to resort to remaining the most attractive cash-giver in the world in order to attract foreign filmmakers


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