- Abu Dhabi is 30 Per Cent More Attractive
- May 14, 2015
- Law Firm: Dentons Canada LLP - Toronto Office
- The UAE is constantly seeking new and innovative ways to encourage business growth across the Emirates. Film and TV production is one of the diverse range of areas in which the Emirate of Abu Dhabi has actively looked to encourage growth, addressing perceptions of high costs and lack of specialist services.
Recent efforts led by the Abu Dhabi Film Commission (the Commission) have delivered significant success. High-profile studio films such as "Fast & Furious 7" and "Star Wars Episode VII", as well as internationally acclaimed car show "Top Gear" and US Emmy-award-winning drama serial "The Bold and the Beautiful" are among those that have chosen Abu Dhabi as their production location.
Supporting the development of the film and TV industry
Like California, the nexus of the US film industry, Abu Dhabi enjoys year-round sunshine and blue skies. However, unlike many other jurisdictions that successfully attract international film producers, Abu Dhabi, as a tax-free corporate environment, does not have the option to offer tax rebates/credits to entice producers.
Taking a fresh approach, the Commission - which is designed to support the development of the Emirates' film and TV industry and to promote Abu Dhabi as a production location, both regionally and internationally - instead offers a film production incentive of a generous 30 per cent cash back rebate (the Rebate) on productions shot in Abu Dhabi. Officially named the International Production Incentive Scheme, the Rebate is the first of its kind in the region.
For international film producers this means a Rebate of up to a US$5 million for feature films. However, in line with the Commission's passion for film and TV, and in a bid to encourage wider industry growth in Abu Dhabi, the Rebate extends to other formats including television dramas, commercials, music videos, lifestyle, reality, game shows and entertainment programmes. It also extends to post-production, digital content services and visual effects (PDV) services for projects shot inside or outside Abu Dhabi and even applies to travel and accommodation including airfares booked on Etihad Airways, the UAE's national airline.
The Middle East’s first international production incentive
The Commission is part of twofour54, the brand name of Media Zone - Abu Dhabi (and incidentally the geographical co-ordinates of Abu Dhabi). The twofour54 free zone plays a central role for companies interested in benefiting from the Rebate as only those with a licensed business in the free zone are entitled to claim the Rebate.
As an alternative to establishing a business presence in the twofour54 free zone, international foreign production companies (Producers) can opt to enter into a production services agreement (PSA) with one of the skilled production services providers (Provider) licensed in twofour54. Benefits to this approach also include the Provider arranging appropriate visas for the Producer's cast and crew, submitting the application to the Commission for script approval, and submitting qualifying production expenditure for the Rebate to the Commission post film completion.
Obtaining script approval
However, before filming can commence the Commission will need to approve the script. Once the Provider submits the application, approval of the script should be provided within 20 days. Approval is at the sole and absolute discretion of the Commission, which reserves the right to refer approval to the federal media regulator, the National Media Council, and/or to request further information before reaching a final decision regarding content suitability. To facilitate a smooth and swift approval Producers should ensure that content complies with the Authority's content code, which sets out the principles and sensitivities applicable to productions in the UAE, with particular regard to social, cultural, moral and religious values.
Securing the Rebate
The Rebate is only payable after filming has completed. Once audited financial statements for qualifying production expenditure have been submitted to the Commission, the Rebate is paid to the Provider within 60 days. The Provider in turn pays the Producer. Thus it is key, not only that an appropriate Provider is chosen, but also that the PSA and any related Rebate agreement contains appropriate indemnity language regarding payment of the Rebate.
How we can help
At Dentons we have a long history of representing leading companies in the film and television industries. We represent Hollywood studios, television networks and cable companies, and some of the best known animation and visual effects companies. Our team also represents leading production and distribution companies, including advising high-profile film production companies on PSAs in Abu Dhabi. Additionally, with more than 50 years on the ground in the region, we have a deep understanding of the local legal and business environments.
As producers seek to take advantage of both the Rebate and the developing skill and experience of the locally based crew, suppliers, studios and post-production facilities, we expect to see continued growth in this area. For further information on how we can help you, contact Joby Beretta, Craig Hughson or your usual Dentons contact.