Offerings expand with addition of 20% credit for non-resident talent
It has stood in for Iraq, Vietnam, Spain, Brazil, Cuba and various other far-flung places in the past. Now Puerto Rico is hoping to further boost its location appeal with an expanded film law. The change comes at an opportune time given the cutbacks in the film incentive offers of some U.S. states.
Jennifer Lopez and her husband, crooner Marc Anthony, both New Yorkers of Puerto Rican descent, flew in for the official signing of the new film law on March 4. The Nuyorican couple shot their Hector Lavoe biopic, “El Cantante,” here as well as numerous musicvideos. Word has it that they’re even planning to build a soundstage on the island, although their reps have declined to comment.
Since it was introduced in 1999, a 40% transferable tax credit on payments to PR residents had been limited to films, television skeins, docus and shorts. The amended law has expanded the credit’s scope to include non-fiction TV programs, music-videos, videogames, commercials, dubbing, soundtrack recordings and live performances.
“Another major addition is the new 20% tax credit for non-resident onscreen talent,” says film commissioner Mariella Perez Serrano, who has noted an uptick in inquiries since the law was unveiled. Furthermore, there are no caps on credits for payments to non-resident talent, i.e. actors and stuntmen. For payments to PR residents, the annual tax credit cap has been raised to $50 million from the original $15 million.
“The 20% tax credit for non-PR talent (actors) is not a strain on Puerto Rico’s finances, because the talent is subject to income tax for working in Puerto Rico at a flat rate of 20% of such compensation, withheld at the source by the employer,” says entertainment lawyer Antonio Sifre, a co-author of both old and new film laws. “In turn, actors may take the taxes paid in Puerto Rico as a foreign tax credit in their U.S. tax return,” he says. “Puerto Rico is a foreign tax jurisdiction with respect to the IRS.”
Infrastructure incentives include a 25% tax credit on the development or expansion costs of studios, labs and facilities, which are sorely lacking in the commonwealth.
With the industry spurred on by a more robust marketing and awareness campaign, the past five to six years have seen a string of high-profile shows taking advantage of Puerto Rico’s perks, which include stunning beaches, verdant tropical forests and urban sprawl. For “Fast Five,” which shot on location in Puerto Rico for seven weeks, they re-created a Rio de Janeiro hilltop shantytown, or “favela,” for some high-octane action scenes, despite location shoots in the Brazilian city itself. “Pirates of the Caribbean: On Stranger Tides,” with Johnny Depp and Penelope Cruz, shot in Puerto Rico for three days.
“The local crew, people and incentives added up to a great experience,” says “Pirates” executive producer Barry Waldman, who also shot “Bad Boys II” on the island. “I hope to one day shoot an entire movie in Puerto Rico.”
“The Rum Diary,” which also stars Depp, was shot entirely on the island and is one of three releases this year featuring Puerto Rico as a backdrop.
In 2008, “The Men Who Stare at Goats,” starring George Clooney, shot nearly all its scenes (except for those set in the desert) in Puerto Rico, according to UPM Ellen Gordon, who has worked on the bulk of the high-profile pics that have come in.
“People should look at Puerto Rico as more than just an island location,” says the Iraq-based satire’s executive producer, Jim Holt of Winchester Film Capital. “The locations, people and bilingual crew are terrific.”
“We’re still on a learning curve,” says location manager Luis Estrella, who points out that some government agencies are not agile enough at issuing shooting permits. Still, “despite some delays, these shows have kept on schedule.”
But Puerto Rico’s tight-knit film community feels that its home has not yet reached its maximum potential as a location venue. The local bizzers are banding together to form a Film Industry Cluster, modeled after Ontario’s, that will consolidate all the audiovisual entertainment services on the island and work in tandem with the film commission. Their first stop: The AFCI Locations Expo/Produced By Conference at the Walt Disney Studio in June.
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