TAX INCENTIVES FOR THE ENTERTAINMENT INDUSTRY IN GEORGIA
June 12, 2017
On May 9, 2017 Georgia’s governor signed two bills into law that substantially strengthened and expanded the tax incentives available to the entertainment industry for producing works in Georgia.
We have had an incentive tax credit program for the film and television industries in Georgia since 2005. Many other states have had similar programs. North Carolina had one of the most favorable for the film industry and had become a movie powerhouse. Then conservative legislators in North Carolina revoked the incentives and North Carolina’s movie industry has about disappeared. Meanwhile, the Georgia legislature fought back against attempts to remove the incentives for film here. As a result Georgia has become one of the top ranked centers for movie and television production in the world – by some measures, number 3 among the states after California and New York and by at least one measure, number one.
We have also had an incentive tax credit program for interactive entertainment for a few years, but it was not very helpful in incentivizing developers to start their companies here or to relocate here. It was mostly helpful in enticing companies to remain here. In its most recent form, prior to the recent amendments and additions, it required companies to spend $500,000 on payroll the year before they could start counting expenditures to which credits could apply. The most important changes that the 2017 legislature made to the incentives for interactive entertainment were that the requirement of meeting a threshold in payroll the year before expenditures could be counted in connection with the calculation of incentives was eliminated and the threshold was reduced to $250,000 and applies only to payroll for the first year for which the credits are claimed.
The legislature also added a new incentive tax credit statute for postproduction activities, which greatly expanded the availability of the incentives available under the film and television credit, and added a new statute that provides incentives for live touring productions and music recordings.
The amendments and additions will be effective beginning January 1, 2018. If the amount you spend in Georgia for any one entertainment project your company may work on may exceed a threshold of $100,000 over one tax year, then you may have a possibility of benefiting from the credits and should talk to an attorney or accountant with an understanding of how they work. In some situations it’s advisable to apply for any credits effective the first business day of the new year. You may not file earlier and you would not want to file later in those situations. At the time you file, you will need to have spent the time necessary to determine what you are required to file and how to answer many questions. Starting more than three months before the first business day of 2018, which will be Tuesday, January 2018, is recommended.