Comments and Recommendations on the Film Ratings and Incentives Board Bill which Proposes to Grant Tax Exemptions to Film Makers

July 26, 1995 BIR RULING [UN-274-95] MEMORANDUM FOR : Hon. Frumencio Lagustan Assistant executive Secretary for Legislation FROM : Commissioner Liwayway Vinzons-Chato Bureau of Internal Revenue RE : Comments and Recommendations on the Film Ratings and Incentives Board Bill which Proposes to Grant Tax Exemptions to Film Makers FEATURES: Senator Freddie Webb introduced Senate Bill No. 1698 "creating the film Ratings and Incentives Board" under the administrative supervision of the Department of Trade and Industry, defining its powers and functions and for other purposes. This bill seeks to provide a means for the development of the motion picture industry by resurrecting the functions of the already abolished Film Ratings Board, which main function then was that of providing tax rebates to deserving production outfits which produce quality films. Unlike the MTRCB, an agency attached to the Office of the President whose chief concern is the review and classification of films as to its suitability for public viewing, the objective of the proposed Film Ratings and Incentives Board is to upgrade the quality of Filipino motion picture productions by giving them incentives/tax exemptions/rebates for producing quality films and in order to make them marketable abroad, thus helping in the development of the local film industry as well as making it an instrument of the economic progress of the country. COMMENTS AND RECOMMENDATIONS: Among the proposed powers and functions of the subject Film Ratings and Incentives Board as stated under Section 4(2) of the bill provides as follows: "(2) Formulate and establish a graded system of incentives based on tax exemptions/rebates for outstanding motion picture productions, in coordination with the Department of Finance and the Film Academy of the Philippines; The above-quoted power of the proposed Film Ratings and Incentives Board is tantamount to giving the said Board the power to grant tax exemptions, which power is vested only by the Philippine Constitution to Congress [Art. VI, Sec. 28(4), 1987 Phil. Constitution]. Therefore, no such power could be given to the said Board because it would be unconstitutional. Moreover, this Office does not endorse the grant of any tax incentives to local film producers in view of the moratorium policy of the government on tax exemption. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue