Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

Section 481 of the Taxes Consolidation Act 1997, also known as the film tax relief, is intended to act as a stimulus to the creation of an indigenous film industry in the State creating quality employment opportunities and supporting expressions of culture. I thank the Senator for his opening remarks. He has shown a depth and knowledge of the industry that very few Members have and he has gone through the various groups involved in the sector that participate and are involved in it. They earn a good livelihood and income from it, with the benefit of the tax consolation relief I mentioned. The scheme provides relief in the form of a corporation tax credit related to the cost of production of certain films. The credit is granted at a rate of 32% and is available on qualifying expenditure of up to €70 million for any project or film.

The Finance Act 2018 introduced a short-term, tapered regional uplift for productions being made in areas designated under the state aid regional guidelines. The purpose of the regional uplift is to support the development of new, local pools of talent in areas outside the current main production hubs of Dublin, Cork and Wicklow to support the geographic spread of the audiovisual sector. The uplift originally provided for an increase of the credit for four years, with 5% available in years 1 and 2, 2019 and 2020. That 5% uplift is on top of the 32% available everywhere in the country. That was followed by 3% available in year 3, 2021, and 2% available in year 4, 2022.

However, in recognition of the detrimental impact the Covid-19 crisis had on the audiovisual sector, the Finance Act 2020 amended the original uplift scheme to provide for an additional 5% in 2021. Instead of being available for two years, it was available for three. I asked about the matter that surely during Covid-19, this may not have cost the Exchequer that much, but the film sector did reasonably well during the Covid-19 period as lots of their productions were in different areas throughout the country and the sector was more resilient during Covid-19 than many others. That may not have been anticipated at the time. In effect, this was to replace the incentive year lost. As I said, an extra year was given. The tapered withdrawal of the uplift then restarted this year, with a reduction to 3% in 2022. It will reduce 2% in 2023. No uplift will remain thereafter.

The uplift is an approved state aid. The premise upon which it was notified to the European Commission was that it would be temporary in nature and would be withdrawn on a tapered basis. If the uplift was deemed to be permanent, it might not have been approved in the first instance. If the uplift were to be changed or retained for a further period, we would then have to go back to the European Commission and start negotiations again.

I am aware of how the uplift was received upon its introduction. However, there are currently no plans to increase the regional uplift rate or to introduce alternative proposals for regional-specific changes in the context of section 481.The main film tax credit will remain available to qualifying productions in all areas of the country following the winding down of the uplift in those regions. That costs about €70 million per annum. The Senator is aware that the Government is committed to the continued growth of the audiovisual sector. The Finance Bill 2022 provides for the extension of section 481 from the current end date of 31 December 2024 to 31 December 2028.