Film industry welcomes waiver of entertainment tax for two years

• Claims 10% levy didn’t support development of the film industry
• Hopes footfall in cinemas will gradually increase towards mid-year, at present it is only 25% to 35% of full capacity
• Expresses concerns on release of key content being pushed towards latter part of the year
• Says local film producers may not take a major risk to release any movies right now

 By Charumini de Silva

The film industry yesterday hailed the Government›s move to waive off the entertainment tax for two years, whilst hoping they would be able to survive the cinematic experience amidst the new normal.

The Daily FT spoke to a number of film exhibitors, distributors, importers and producers, all of whom welcomed Prime Minister Mahinda Rajapaksa’s decision to waive off the 10% entertainment tax from all the cinemas this year and next year, after considering the requests made by industry stakeholders.

“We are extremely happy with the decision taken by the Government in this crucial time post-pandemic. The Prime Minister Rajapaksa has always been very supportive of the film industry and this was a plea of the industry for the past several years, but authorities turned a deaf ear to it,” Liberty Cinemas Ltd. Managing Director Imthiyaz J. Cader said.

Cader said this would help them recover faster and allow investments into the development of the industry.

He was also optimistic that crowds would gradually begin to patronise cinemas once more, as 50% of the seating capacity has been permitted by the Government from its previous direction of 25%.

Lanka Film Distributors Ltd. Chairman Rakith Sugathadasa, appreciating the decision said the levy imposed by the local authority had no basis in the current context and that they expect the Government will consider abolishing it in the future as it has not helped the development of the industry.

“The tax was initially imposed to dispose of the celluloid used at theatres and there was a purpose in the levy. However, this tax no longer serves the industry,” said Sugathadasa.

Although there is some Tamil content to be released this year, Sugathadasa voiced concerns over whether footfall would be the same without key Hollywood and Bollywood films being pushed towards the latter part of the year.

He also had mixed feelings about local films being released within the year. “Given the tough situation, local film producers are not willing to take a major risk in releasing any movies right now. However, if the footfall to theatres improve by the first quarter of the year, we can hope for a few releases,” he added.

Welcoming the move by the Government, a spokesperson for Cinema Entertainment Ltd. noted that most cinemas were running at a loss even before the COVID-19 pandemic in the country.

“The tax relief is a great support to the industry, which was already struggling. Around 90% of the cinemas in the country were running at a loss. As industry stakeholders, we have been lobbying for over two years and nobody took action,” he stated.

He also claimed that despite the levy paid to the National Film Corporation (NFC) and Municipal Council on every ticket sold, there was hardly any service provide to them to the industry.

Sharing the same sentiments, R. A. Films Proprietor Rohan Pinnaduwa, expressed confidence that the Government would consider the concerns put forward by the industry going forward under the new normal.

“The cinema industry was severely hit by the pandemic. All cinemas were closed for most of last year, and the industry ran into great financial difficulties unable to sustain staff and other day-to-day expenses. The only motivation which kept us going was our passion for the industry,” he added.

Pinnaduwa said a popular Tamil movie which is out in theatres now has been able to attract around 25% to 35% of the maximum capacity, but was nevertheless optimistic with Kollywood having over 90 movies to be released this year.

“The business will not be the same as before,” he added.

Scope Cinemas Chairman Naveed Cader meanwhile was grateful for the support extended by the Government to the film industry.

“The move to waive off the entertainment tax was quite opportune, to sustain the industry given the hardships the industry underwent with the pandemic. We faced two closures of cinemas and grappled with no content to attract crowds with strict health guidelines.”

Although theatres are back in operation, Cader said the key content has not yet come as filmmaking has been disrupted globally, though he is hopeful that there will be some improvement in the market with the vaccine and content towards June.