Hobbits Enjoy Millions in Tax Credits
November 1, 2011 New Zealand Taxation
The current production of the “Hobbit” movies is receiving millions in tax credits for filming in New Zealand.
According to a statement released last week by 3 Foot 7, a production company behind the Hobbit films, the movie received approximately NZD 20.2 million in tax rebates in its first year of production. The company has so far seen a NZD 70.9 million revenue, which comprised mainly of fees from New Line Productions, a subsidiary of Warner Bros Entertainment.
Under current New Zealand regulations, a movie production with an annual qualifying New Zealand production expenditure exceeding NZD 15 million is eligible for a 15 percent tax credit. Further grants can be available for movies with large budgets for post production digital effects and processing. Movies with expenditures exceeding NZD 200 million are eligible for a further NZD 9.75 in credits.
According to analysts’ estimates, the entire Hobbit production may cost as much as USD 500 million before completion. The New Zealand government could give out an approximate NZD 60 million tax rebates by the end of filming.
Last year, Weta Digital, a Wellington based company working on digital effects for the movie, was awarded approximately NZD 7.2 million in tax grants under the government’s Technology Development Grant Programme.
Photo by Squiggle