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5% Set Aside Tax Incentives Program for Commercial Advertisements and Music Videos
The primary goal of the Motion Picture Production Tax Incentives Program is to promote and stimulate the production of commercial motion pictures in Arizona. The program achieves this goal by providing incentives for qualified motion picture production companies.
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Overview |
What |
Income Tax Credit - a transferable Arizona income tax credit. Click here to view the available amount of tax credits; $2,500,000 available to Commercial Advertisement and Music Videos in 2008. Transaction Privilege Tax (TPT) Exemption on: - Purchased machinery, equipment and other tangible personal property,
- Job printing, embossing, engraving and copying,
- Leased or rented lodging space,
- Sales of catered food, drink and condiments, and
- Construction contracts for buildings and other structures.
Use Tax Exemption - on machinery, equipment and other tangible personal property. |
How |
To become a qualified company and receive motion picture production tax incentives please view the application process, available February 1, 2008. (see below) |
Who |
A company that: - Is primarily (more than 50%) engaged in the business of producing motion pictures,
- Has a physical office and bank account in Arizona,
- Completes productions within 60 days of requesting pre-approval,
- Aggregates qualified Arizona production costs to at least $250,000 within 12 consecutive months following the initial pre-approval.
- Employs Arizona residents in its motion picture productions. In 2008 thru 2010, at least 50% of full time employees working in this state must be Arizona residents, and
- Submits and initial application for at least one commercial advertisement or music video, which is not required to total $250,000 in production costs,
- Has the lawful rights to produce the commercial advertisements or music video,
- May submit additional commercial advertisements or music video productions during the 12 month certification period.
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Why |
A qualified company may realize the following incentives: - Income tax credits equal to 20% or 30% of the company’s investment in eligible Arizona production costs.
- TPT exemptions of approximately 6% off of purchases.
- Use tax exemptions of approximately 5% off out-of-state purchases.
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When |
Applications are accepted under the 5% Set Aside Program beginning February 1, 2008. |
General Info For more detailed information please see MoPic FAQs.pdfbelow or direct questions to the Program Manager.
Legislative Information NEW!
Email Updates Commerce will soon begin the process of drafting rules for the Motion Picture Production Tax Incentives Program and will seek public comment. As soon as rules are adopted, Commerce will place an update on this website and will notify companies and others who have requested information. If you have not yet placed your e-mail address on our list, please click here send an e-mail requesting notification. Please be sure to identify Commercial Advertisements and Music Videos as the program for which you would like notification. Return to the Arizona Film Office Website Return to the Motion Picture Tax Incentives Home Page
Program Limitations for 5% Set Aside Tax Incentives Program for Commercial Advertisements and Music Videos
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Commerce cannot pre-approve more than $2.5 million per year in tax credits for commercial advertisement and music video companies Download the commercial advertisement and music video allocation table to view the remaining amount of tax credits.
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There is no limitation on the amount of TPT and use tax exemptions available to a qualified company. Nor is there a limit on the total amount of TPT and use tax exemptions available in any calendar year under this program.
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Commerce shall not pre-approve tax incentives for: - An obscene motion picture as described under Title 12, Chapter 7, Article 1.1,
- A production that depicts sexual activity as defined in Title 13, Chapter 35, or
- A production that would constitute sexual exploitation of a minor or commercial sexual exploitation of a minor under Title 13, Chapter 35.1.
Download a copy of the obscenity statutes to view the motion picture content restrictions.
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Tax credits that were voluntarily relinquished may be re-allocated to a qualified company with the next priority placement number if the relinquishment occurs in the same calendar year in which the initial pre-approval was issued. Tax credits relinquished after the calendar year in which pre-approval was issued are not subject to re-allocation. | (Back to top)
Application Process - 5% Set Aside for Commercial Advertisements and Music Videos To become a qualified company and receive motion picture production tax incentives an eligible applicant must follow the process below. - Apply for program incentives by completing an Initial Application Form and submitting it to Commerce.
- Add additional commercial advertisements or music videos to a pre-approved initial application by submitting form Addendum to Commerce.
- Concurrent with submittal of an initial application or addendum to Commerce, a company may request a letter of good standing from Revenue by submitting form Tax Clearance Application to Revenue. Requesting the letter of good standing at this time will expedite Revenue’s approval for an exemption certificate.
- Upon receipt of an initial application Commerce will assign a priority placement number for receipt of tax incentives.
- Within 15 business days of receipt of an application, Commerce will notify the company of pre-approval or denial.
- If a company receives pre-approval for tax credits, Commerce will issue a Letter of Qualification (effective for twelve-months with no provision for renewal of the qualification) to the company and transmit a copy to the Arizona Department of Revenue.
- When a Tax Clearance Application is received by Revenue, Revenue will verify the company’s eligibility under its statutes and issue a letter of good standing and an exemption certificate to the company.
- Then the company may claim the transaction privilege tax (TPT) and use tax exemptions. Note: a final determination of eligibility will be made at post-approval.
Next Steps: - Within 60 days of submitting an initial application or an addendum a company must complete all productions listed in its initial application or addendum.
- 30 days after completion of a production, a company must submit a form Interim Report to Commerce. When the qualifying expenditures on interim reports reach the $250,000 threshold, Commerce will advise the company it may elect to request post-approval by submitting form Acknowledgement of Eligibility for Post-Approval.
- If the company wants to submit additional productions under the initial application, it may do so through out the 12-month certification period.
Upon Completion of all productions under an initial application: - the company must submit a Completion Report to Commerce within the later of:
- Within 30 days of completion of the last pre-approved production or
- Within 30 days of the end of the 12-month certification period,
- Commerce may issue post-approval to the company after reviewing an Acknowledgement of Eligibility for Post-Approval or a Completion Report and verifying the company’s eligibility.
- Once post-approval is received a qualified company may claim the tax credits and retain TPT and use tax exemptions already received.
Program Forms NEW! Initial Application – for requesting pre-approval for tax credits
NEW! Addendum - for adding a production to a pre-approved initial application
NEW! Interim Report – shows production completed in 60 days prior to investing $250,000
NEW! Acknowledgement of Eligibility – request post approval during 12-month certification
NEW! Completion Report – final request for post approval · Expense Report (Forms 1 & 2) (PDF) (EXCEL)
· Calculation of Residency (Forms 1 & 2)
· Residency Affidavit
· Voluntary Relinquishment of Tax Credits
· Obscenity Statutes
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