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China to Boost Local Films With Tax Break

China is to give its film industry a boost over Hollywood with the introduction of a tax break reward scheme for cinema operators.

Currently cinemas collect a 5% tax on all ticket sales which is paid into the Central Movie Special Funds. However, cinemas which achieve two thirds of their revenues from Chinese films will be able to keep half of the tax, the Xinhua news agency reports. That is equivalent to a 2.5% incentive.

The National Film Industry Development Special Fund Management Commission will only allow the rebate to those cinemas which have a clean record and have not participated in box office rigging, Xinhua said.

The move follows only a week after China created a financial incentive for those films which do well abroad. It said that it would reward those films which score more than $153,000 (RMB1 million) at the overseas box office.

It is not clear what impact the new measure will have as local films are already performing strongly in China. Last year Chinese-made and Chinese-language movies enjoyed a 61.6% share of the total box office, according to the data from the State Administration of Press Publishing Radio Film & Television. Total box office grew by 49% to $6.78 billion, with the performance of Chinese movies surging by 67%.

The new tax incentive could however have an impact on box office reporting. Mis-reporting of theatrial box office has been a recurring problem as the Chinese industry has grown at an unprecedented pace and scale.

Earlier this month the industry regulators gave a slap on the wrist to the distributor of “Ip Man 3,” along with ticketing agencies and certain cinemas, for inflating the film’s reported box office through a combination of fake screenings, high prices and buying up tickets to their own movie.

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