--
The tax exemption in respect of films in South Africa --
Mon, 11 Sep 2017 12:37
--
From the beginning of the production stage to the actual editing of the final film and exhibition, the industry contributes to the economy, revenue, job creation and economic activity.
The results from the economic impact modelling report for 2017, prepared by Urban- Econ Development Economists for the National Film and Video Foundation (NFVF), reveal that the film industry has had a positive economic impact on the South African economy.
During the 2016/17 financial year, the film industry in South Africa had a direct impact of R4,4 billion on economic production. The NFVF Report also revealed that the operations of the film industry in South Africa raised the level of production by approximately R12,2 billion in total.
The South African income tax system contains an incentive to stimulate the production of films within the country. The current incentive comes in the form of s12O of the Income Tax Act, No 58 of 1962 (Act). Section 12O came into effect on 1 January 2012 and applies to all receipts and accruals of approved films if principal photography commenced on or after this date but before 1 January 2022. Section 12O provides for an exemption from normal tax, specifically income derived from the exploitation rights of a film. The South African Revenue Service (SARS) has also recently issued a guide, reflecting SARS s interpretation of this provision (SARS Guide).
Exemption requirements
In order to qualify for an exemption, taxpayers must satisfy the following criteria:
NFVF must approve the film as a local production or co-production. A film that is co- produced must be co-produced in terms of an international co-production agreement between South Africa and another country, which agreement must be subject to the Constitution.
Income is received by or accrued to two types of investors:
2.1 Those who acquired exploitation rights prior to production of the film; or
2.2 Those who acquired exploitation rights after the production commenced but before completion date provided that funds they receive will not be used to compensate pre-production investors.
Income must be received or accrued within a period of 10 years after the completion date of that film.
Basis for exemption
The point of departure for the exemption is that there must be a film. A film is defined in the Act:
a feature film;
a documentary or documentary series; or
an animation,
conforming to the requirements stipulated by the Department of Trade and Industry in the Programme Guidelines for the South African Film and Television Production and Co-Production Incentive. These requirements contain, among other things, the duration of the film, the format and processing, and distribution methods used.
One requirement worth mentioning is that in order to qualify, the duration of a film must be 90 minutes or more (45 minutes or more for IMAX). This means that producers of short films, television series and even reality shows will not enjoy this exemption, which could have the unfortunate consequence of excluding producers of quality locally produced television content, who might not have the capital to make a full-length film.
As noted in the requirements for an exemption, income must be derived from the exploitation rights of the film. Exploitation rights are defined in the Act as rights to any receipts and accruals in respect of the use of, the right of use of, or the granting of permission to use any film to the extent that those receipts and accruals are wholly dependent on profits and losses in respect of the film.
It is important to note the words, wholly dependent on profits and losses . The receipts and accruals must be dependent on the success of a film.
The exemption does not apply to a Broadcaster as defined in s1 of the Broadcasting Act, No 4 of 1999 (Broadcasting Act) or a connected person in relation to a Broadcaster.
The Broadcasting Act defines a Broadcaster as any legal or natural person who composes, packages, or distributes television or radio programme services for reception by the public or sections of the public or subscribers to such a service irrespective of technology used.
Reporting requirements
Section 12O also makes provision for special purpose corporate vehicles , which are defined as companies responsible for the production of a film as required by the Department of Trade and Industry in terms of the Programme Guidelines for the South African Film and Television Production and Co-Production Incentive. Such special purpose corporate vehicles (SPCV) must provide a report to the NFVF containing such information, within such time and in such manner as is prescribed by the Minister, when income arising from exploitation rights of a film is distributed to a person within a period of 10 years commencing from the completion date of the film. The same duty applies to a collection account manager (CAM) that manages exploitation rights under a collection account management agreement and has been approved by the Minister of Trade and Industry for the purpose of s12O by notice in the Government Gazette.
According to the SARS Guide, the purpose of this on-going reporting is to measure the success of the incentive and to guard against tax avoidance.
Specific provision regarding deductions
Section 12O(5) states that notwithstanding s23(f) of the Act, a taxpayer may deduct from income an amount in respect of expenditure incurred to acquire exploitation rights in a film. The amount of the deduction is equal to the amount of any expenditure incurred to acquire exploitation rights less any amount received or accrued during any year of assessment in respect of that film. Section 23(f) of the Act states that it is impermissible to deduct amounts incurred to receive exempt income. To the exte
Most recent headlines
11/12/2025
Dalet, a leading provider of cloud-native, end-to-end media workflow solutions, ...
28/11/2025
Nadia Fall attends the 2025 Sundance Film Festival premiere of Brides at the Egyptian Theatre on January 24, 2025, in Park City, Utah. (Photo by Donyale West/...
28/11/2025
It's easy to ignore those little red update available badges. But when it ...
28/11/2025
WASHINGTON Federal Communications Commission has released a tentative agenda for the December Open Commission Meeting scheduled for Thursday, December 18, 2025 ...
28/11/2025
The Professional Fighters League is looking to super-serve fans of mixed martial...
28/11/2025
Fubo has released in beta on select Roku devices a new feature that lets users display up to four simultaneous streams at once....
28/11/2025
The WNBA playoffs and Week 4 of the NFL regular season highlight the list of live sports events airing on television this weekend....
28/11/2025
The 32nd class of honorees to the B+C Hall of Fame took to the stage at New York's Ziegfeld Ballroom on September 26 for a gala induction event. Click below...
28/11/2025
We hold in our hands the very last Next Text for Next TV, the weekly back-and-fo...
28/11/2025
DirecTV said it made a deal with EchoStar to buy EchoStar's video businesses, including satellite-TV provider Dish TV and virtual MVPD Sling TV, for $1 plus...
28/11/2025
The Broadcasting+Cable Hall of Fame, the premier industry event paying tribute to the influencers, innovators and shining lights of broadcast, cable and streami...
28/11/2025
Friday 28 November 2025
Sky Sports x Slawn drop limited-edition football jersey...
28/11/2025
Rohde & Schwarz shows resilience in a challenging environment, revenue exceeds t...
28/11/2025
Unwrapped: The Toy Show Appeal - airing this Sunday on RT One and RT Player- s...
27/11/2025
LONDON Vizrt has added several AI-driven advanced features offering improved speed, intelligence and accuracy in the newest version of its media asset managemen...
27/11/2025
Prime Video has launched AI-powered video season recaps in a beta version for select English-language Prime Original series in the U.S., a move Amazon is callin...
27/11/2025
Back to All News
Netflix's Raat Akeli Hai: The Bansal Murders Marks a Grand...
27/11/2025
27 Nov 2025
GSMA brings M360 Eurasia 2026 to Samarkand in partnership with VEON...
27/11/2025
Tahar Rahim and Izuka Hoyle star in the gripping six-part Sky Original from Acad...
27/11/2025
Thursday 27 November 2025
Sky Arts Reveals the Nation's Greatest Basslines - and Queen Reign Supreme
The UK's most iconic basslines have been revealed...
27/11/2025
Back to All News
Stranger Things 5': Prepare for One Last Adventure With O...
27/11/2025
The media industry has a paradox at its core. It's an industry built on light, color and imagination, yet behind the scenes, it's powered by one of the ...
27/11/2025
Rating reflects rating progress across areas including policies, diversity & inclusion, health & safety and Net Zero leadership
Winchester, UK, 27 November 202...
27/11/2025
What are the industry standards for Retail Media? Kathryn explains that certification is based on the IAB Europe Retail Media Measurement Standards and the IAB ...
27/11/2025
World champion boxer and Irish sporting icon Katie Taylor will be in studio this...
27/11/2025
Roblox, one of the world's most popular online gaming platforms for primary ...
27/11/2025
Black Friday is leveling up. Get ready to score one of the biggest deals of the season - 50% off the first three months of a new GeForce NOW Ultimate membership...
26/11/2025
SVG Sit-Down: Prime Video EP Mike Muriano Previews Massive Black Friday Slate Fe...
26/11/2025
A cinematic snow sculpture at the 1995 Sundance Film Festival. Photo by Randall Michelson...
26/11/2025
Book podcasts are booming. On Spotify, you'll find everything from celebrity book clubs to deep dives with bestselling authors. And in markets where audiobo...
26/11/2025
Mumbai, November 24, 2025: In a first-of-its-kind initiative, JioStar, in collab...
26/11/2025
LONDON Factual content producer ITN Productions has launched a new low-latency IP gallery for news bulletins....
26/11/2025
MIAMI TelevisaUnivision said it struck a new multiyear distribution agreement with YouTube TV that includes distribution of TelevisaUnivision's U.S. network...
26/11/2025
OpenDrives, Inc., a leader in software-defined data storage and data services, today announced the launch of the Atlas Corporate Creative Solution. This new Atl...
26/11/2025
Disguise, the industry-leading company powering the world's biggest live performances, is partnering with pioneering LED wall manufacturer DVS to give atten...
26/11/2025
HighField AI, the pioneer in agentic and multimodal automation for broadcast and media production, today announced the expansion of its global channel partner n...
26/11/2025
As high-stakes Premier League fixtures approach and additional premium content launches, with MONO positioning themselves to dominate Thailand's sports stre...
26/11/2025
Hosting a wide variety of events from high-intensity NHL games to complex live music concerts and major entertainment productions, Montreal's 21,000 capacit...
26/11/2025
Vizrt, the leader in live production technology revolutionizing viewer engagement and experience, releases AI-driven advances focusing on speed, intelligence, a...
26/11/2025
ITN Productions, an award-winning factual content producer, today launched a new low-latency IP gallery for news bulletins. Responsible for delivering a leading...
26/11/2025
Ikegami reports ongoing advances throughout 2025 in developing and delivering coordinated television production solutions that maximize quality, versatility and...
26/11/2025
Following the Nov. 21 blackout of NBCUniversal channels on Fubo, the two sides have traded barbs about their inability to reach a new carriage deal....
26/11/2025
LONDON As TV sports rights become increasingly important for both broadcasters and streamers, Ampere Analysis predicts global investment in the genre will surpa...
26/11/2025
LOS ANGELES Vubiquity said it has achieved the Amazon Web Services (AWS) Media & Entertainment Competency as part of the AWS Partner Network (APN). This designa...
26/11/2025
WASHINGTON The Federal Communications Commission's Enforcement Bureau said it has entered into a consent decree with Comcast calling for the cable company t...
26/11/2025
Berklee Named to the Hollywood Reporters Top Music Schools List The publication highlights the college's screen scoring program, industry partnerships, and ...
26/11/2025
Back to All News
Animated Series Love Through a Prism' Casts New Light on ...
26/11/2025
Back to All News
NALIP Unveils Fifth Cohort of Director Incubator
Social Impact
26 November 2025
United States
Link copied to clipboard
The National Assoc...
26/11/2025
YouView Achieves Greenly Gold Certification for SustainabilityNov 26, 2025
YouView is proud to announce a Gold Certification award from Greenly for our perform...
-- 
