China tries to boost its film industry over Hollywood by introducing a tax break reward scheme for cinema operators.
Currently, movie theatres collect a 5% tax on all ticket sales, which is transferred to the Central Movie Special Funds. However, if 2/3 of a Chinese theatre’s revenue comes from distributing Chinese films, then the theatre will be able to keep half of the tax, according to the Xinhua news agency. This is equivalent to a 2.5% incentive.
The National Film Industry Development Special Fund Management Commission will only allow the rebate to those cinemas which have a clean record and have not participated in box office rigging. Also, the PRC created a financial incentive for those films which do well abroad. It is said that it would reward those films which score more than $153,000 at the overseas box office.
The impact of this new measure is not clear as local films are already performing strongly in China. However, this new tax incentive may have an impact on box office reporting.
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