Several countries provide tax and other incentives for film productions. These countries include the Unite Kingdom, Canada and Germany. Before the Jobs Creation Act the costs of film and television productions were not deductible in the applicable year for U.S. federal income tax purposes. A growing number of productions took therefore place outside the U.S. These developments were noted by the U.S. Congress, and in a Report it was stated that spending outside the US amounted to 10 billion USD per year, and that there are 270,000 to 280,000 related jobs in the US. Finally it was mentioned that 70% to 80% of the workers are hired at the location were the production is filmed.
The new tax incentive introduces the possibility to treat (at election) the costs of television or film productions as immediately deductible expenses. The incentives is available for productions for which the costs do not exceed 15 million USD, and if at least 75% of the total expenses is for services performed in the United States. For TV series only the first 44 episodes are eligible for the relief. In addition another general tax incentive is being phased in (until 2010) under which the corporate tax rate that is applicable to domestic production activities may be reduced by 9%.
Whether these new incentives will indeed lead to an increase in U.S. based productions is to be awaited.