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Tax Incentives Spark New Wave of Mexican Filmmaking

There are few more powerful public-sector mechanisms than tax incentives.

Mexico is a case in point. The producers of “Time Share,” which won the World Cinema Dramatic Special Jury Award for Screenwriting at Sundance; Berlin competition player “Museum”; and Alfonso Cuarón’s upcoming “Roma” are, in many senses, the fruit of a tax mechanism known as Eficine 189, which has helped power a Mexican film renaissance.

Introduced in 2006-07, this incentive has increased tax break coin from 500 million pesos ($27 million) in 2014 to $37.8 million in 2017.  Feature film production has risen with it, from 14 films in 2002 to 69 in 2010 and 173 last year.

“In financing terms, the tax incentive has been the motor driving the growth of Mexican cinema,” says Jorge Sánchez, director of Mexico’s Imcine.

They have other advantages. Aiding film financing, they facilitate market entrance. “The tax incentive launched in Mexico from 2006 drove up production volume, allowing us young producers to get established and to begin to be considered seriously,” says Nicolas Celis.

Covering much of films’ budgets, incentives have eased recoupment. Mexican comedies more frequently earn over $1 million at the Mexican box office (10 last year). TV operators, led by Televisa, have brought finance and, crucially, marketing muscle to the industry.

“More Mexican movies recoup in the Mexican market or in international where they have a lot of sales,” says Celis. The consequences: “a larger amount of equity coin is flowing back into the industry, and distributors are paying minimum guarantees, which was unthinkable just a few years ago.”

Tax break funding, unlike subsidy lines targeting types of production, encourages creative liberty.

“You are starting to see filmmakers that are less bound by what had been the more traditional divisions in Mexican cinema of arthouse vs. commercial, [which] bring different visions and influences into their work,” says Julio Chavezmontes at production-distribution house Piano.

“Time Share,” which Chavezmontes co-wrote and produced, is unclassifiable according to a class arthouse/mainstream divide. It has a big Mexican star (“Club of Crows’ ” Luis Gerardo Méndez) but has echoes of Wes Anderson in its delivery of a caustic social critique.

“We have some of the best public film policies in the world,” says Chavezmontes. More may come. According to Sánchez, Imcine is negotiating to establish new funding lines for the home distribution of Mexican films that win major prizes at Berlin, Cannes and Venice or even the Oscar, and also foreign distributors of Mexican films.

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