This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
 

UMass Boston Study Finds State’s Revenues Benefit From Film Industry

Thursday, February 18, 2010

A study just released by the University of Massachusetts Boston, has tracked the growth of the state’s film industry and found that the new manner of calculating taxable corporate income in Massachusetts was very likely to increase tax receipts materially from the film production industry. The film industry is using the data to argue against Governor Deval Patrick's proposal to cut tax credits.

According to the study, Massachusetts is among the fastest growing locations for film and television production in the United States, experiencing greater growth than some states with more generous tax credit programs.

“While the bulk of film and television production still takes place in Los Angeles and New York, other states are increasingly competing with these traditional centers through tax credit and other incentive programs,” the report’s authors state. “… Massachusetts had the fifth largest growth rate among the top 25 most active states in the country.”

As Massachusetts taxes non-residents on their income from any trade or business conducted within the state and it is clear that the residuals and profit‐shares arise out of the activities of the talent in the state, the study suggests that Massachusetts could impose its personal income tax on these earnings.

Three of the most successful and critically acclaimed films that have been made in Massachusetts have been based on books written by local authors (e.g. The Departed, Gone Baby Gone and Mystic River). The study infers that film tax credits can foster local talent with direct positive fiscal impacts via increased income tax collections from the sale of book rights, scripts and other intellectual property.

According to the study, Massachusetts is clarifying its taxation regulations, in that earnings generated from film production activities remain subject to Massachusetts taxation, regardless of when paid or how calculated. In a working draft of tax regulations issued on January 11, 2010, the Massachusetts Department of Revenue has taken the position (830 CMR 62B 2.3) that income earned by talent arising from film production activities in Massachusetts is subject to withholding taxes to the extent payable to out‐of-state individuals or their surrogates.

Massachusetts has also changed its corporate income tax laws to require companies to pay tax on income derived from activities in the state. From the beginning of 2009, affiliated companies were required to conduct a unitary business in Massachusetts to calculate their net income, and the apportionment factors used to allocate that income to Massachusetts is now on a combined, rather than separate company, basis.

The study concluded that "there was strong reason to believe that, in the case of the film production industry, the new manner of calculating corporate income taxes was very likely to increase MA tax receipts materially."

The Massachusetts film industry enjoys an annual tax credit subsidy of USD125m which started in 2006; Patrick's budget proposal is to cut this to USD50m by 2011. The study reported that "local production and post-production companies have experienced 'particularly dramatic growth' since 2006, and provide college graduates with new career paths."

Mary Fifield, spokesperson for the Massachusetts Production Coalition, told Metro West Daily News that until the 2006 state credit, Massachusetts was lucky to get USD6m of filmmakers' money. In 2009, Fifield said, the industry spent over USD400m in the state.

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.


The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




Latest News

ADGM Establishes REIT Regime
20/6/2017
Abu Dhabi Global Market, the low-tax international financial center, has introduced a private real estate investment trusts regime.

Jersey Research Highlights China HNW Succession Issues
15/6/2017
Jersey's financial services promotion agency, Jersey Finance, has published new research on the key challenges facing wealth management practitioners working with China's wealthiest individuals.

Abu Dhabi Tax-Free Zone To Launch Foundations
2/6/2017
Abu Dhabi Global Market, the low-tax international financial center, is seeking feedback on its proposal to allow the formation of "foundations," a trust-like entity widely used in civil law jurisdictions.

IoM Consults On Funds Sector Rules
22/5/2017
The Isle of Man Financial Services Authority, which supervises the island's financial services sector, is seeking feedback on draft guidance dealing with the governance of collective investment schemes.

Dubai Tax-Free Zone Seeing New Business From India
19/5/2017
The Dubai International Financial Centre, the leading financial hub in the United Arab Emirates, has become an increasingly popular destination for Indian banks, financial institutions, and fund managers, the zone has said.

Guernsey Issues Warning On 'Sark Company Registry'
18/5/2017
The Guernsey Financial Services Commission has issued a warning concerning an entity named "Sark Company Registry," while investigations are ongoing.

Abu Dhabi Free Zone Hopes To Attract Venture Capital Firms
15/5/2017
Abu Dhabi Global Market, the low-tax international financial center, has unveiled a regulatory framework for managers of venture capital funds.

Australian Budget Targets Housing, Tax Compliance
10/5/2017
Australian Treasurer Scott Morrison's 2017 Budget focused on measures to cool the housing market and crack down on tax avoidance.

Australia Delays Action On Stapled Structures
2/5/2017
The Australian Government has decided to extend a review into the taxation of stapled structures. It will not tackle the issue at the upcoming Budget.

BVI Financial Firms Need To Develop New Niches
13/4/2017
BVI Finance, the financial services industry promotional agency, has said the industry must actively adapt to target new opportunities and promote new offerings internationally.

ADGM Revises Pooled Fund Capital Req's
11/4/2017
Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

ADGM Consults On Allowing REITs
6/4/2017
Abu Dhabi Global Market, the low-tax international financial center, is consulting stakeholders on plans to allow the establishment of private real estate investment trusts.

Gibraltar To Offer Foundations
4/4/2017
Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.

Gibraltar Acts To Preserve QROPS Status
3/4/2017
Gibraltar has made new pension regulations to maintain its attractiveness as a jurisdiction from which to transfer UK pensions.

Australia Consults On Taxation Of Stapled Structures
30/3/2017
The Australian Treasury has launched a consultation on the tax consequences of the re-characterization of trading income derived through the use of stapled structures.