Arizona Motion Picture Tax Incentives

Tax Incentives

The Motion Picture Production Tax Incentives Program was designed to promote and stimulate the motion pictures industry in Arizona. The program achieves this by providing tax incentives to qualified motion pictures production companies that engage in motion pictures production in Arizona. The program also offers tax credits to individuals or qualified companies who construct infrastructure projects such as a soundstage or support and augmentation facility in Arizona. The Arizona Department of Commerce accepts applications year round, on a first, come, first served basis and determines eligibility for program incentives.

Qualifications

Motion Picture Production Incentives:

A company may be qualified for a twenty-four month certification period if it:

Is primarily engaged (more than 50%) in the business of producing motion pictures,
Has a physical office and bank account in Arizona,
Begins production within 90 days of pre-approval,
Anticipates incurring qualifying production costs of at least $250,000 on each motion picture, and
Estimates that Arizona resident will comprise 50% of all full-time employees during production activities.

Commercial Advertisement and Music Video Incentives - 5% Set Aside Program

A company may be qualified for a twelve month certification period if it

Is primarily engaged (more than 50%) in the business of producing motion pictures,
Has a physical office and bank account in Arizona,
Completes production within 60 days of pre-approval,
Anticipates incurring qualifying production costs of at least $250,000 during the 12-month certification period, and
Estimates that Arizona resident will comprise 50% of all full-time employees during production activities.

Summary of Incentives

Transaction Privilege Tax Exemption on:

purchased machinery, equipment and other tangible personal property
job printing, engraving embossing or copying
leases or rentals of lodging space
catered food, drink, and condiments
construction contracts.

Use Tax Exemption on:

machinery, equipment, and other tangible personal property

Transferable Income Tax Credits:

Tax credits for a motion picture production are based on expenses in Arizona directly attributable to the production.
A company may receive income tax credits up to $7 million in 2008, $8 million in 2009 and $9 million in 2010 per motion picture production.
Production costing between $250,000-$1M can be eligible for a 20% credit
Production costing $1M and over can be eligible for a 30% credit

These tax credits may be used to offset Arizona tax liability. The tax credits may be used, sold or transferred; unused tax credit amounts may be carried forward for up to five taxable years.

There is also an INFRASTRUCTURE PROJECT TAX CREDIT of a maximum of 15% of the total base investment. Qualifications and restrictions apply.

For more information and to place your name on the Arizona Film Office stakeholder list to receive copies of draft rules, please visit: www.azcommerce.com/finance/motionpic.asp or contact the Arizona Film Office at www.azcommerce.com/film