Macedonia Filmmakers See Future in Tax Breaks

Macedonian filmmakers are urging the government to grant the movie industry special tax breaks as soon as possible, saying delays in changing the law deprive the country of much-needed profits.

They want Macedonia to follow the example of the Czech Republic, Romania, Bulgaria, Ireland, Belgium, Germany, Luxemburg, Iceland and others, which, they say, thanks to such laws, enjoy an annual inflow of millions of euros.

They believe a window of opportunity has opened up for Macedonia now that Bulgaria and Romania have become more expensive for filming since they joined the EU in 2007. As a result, production companies are on the lookout for new locations.

Darko Baseski, head of the Macedonian Film Fund, says tax relief on movie productions would attract many filmmakers – up from the current handful. “Right now, all we have is one or two low-budget productions that came to Macedonia for few weeks,” he told Balkan Insight.

So far, productions companies from Slovakia and Germany have confirmed they intend to film in Macedonia this year, while a film crew from Turkey has also expressed interest. “But these are small, individual examples,” Baseski said. “A law on tax incentives would bring more serious productions and for longer periods”.

Two months ago, the Film Fund forwarded its initiative to the ministries of culture and finance and the agency for foreign investments, underlining that changes to film taxation law had the potential to generate substantial profits.

A working group set up from the Film Fund and from the ministries of culture and finance recently drew much the same conclusion.

Anita Jovanoska, from the ministry of culture, says the government accepts that such a law “would help the film industry develop and create new jobs for actors, directors, producers and other filmmakers, directly affecting the rate of employment”.

Macedonia earned 900,000 euros in 2009 when an Irish film, As if I’m not there, was shot for six weeks in the country. But big-budget productions can earn millions of euros for the country location.

In Bulgaria, foreign filmmakers routinely spend 2 to 4 million euros while projects like Conan the Barbarian, shot there recently, earned the country a staggering 26.5 million euros.

Besides spending large sums in a short period, big productions employ a large number of people, albeit for short periods. Extra beneficiaries include hotels and other service-sector industries. The films themselves, showcasing the best of the country’s landscape, lure other producers to the same locations.

Robert Naskov, head of the Kino oko production company, says that when film companies shoot on location, they boost several sectors of the economy, starting from textiles, construction and telecommunications to catering and tourism. “It is as if you’ve opened a factory, employing a large number of people,” he said.

Ognen Antov, a film producer who has often worked with foreign crews, agreed. “When a foreign producer spends a million euros in Macedonia, it’s a direct foreign investment in a lot of sectors,” he said.

“Imagine how it would be now if we had another Hollywood blockbuster along the lines of The Peacemaker, which was filmed in Macedonia in 1997,” he said.

Peacemaker was filmed in Macedonia in 1997

Producer Vladimir Anastasov, who also has experience with foreign crews, recalled that interest in filming in Macedonia was substantial in the 1990s, citing Miramax’s Welcome to Sarajevo also shot in Macedonia.

“Unfortunately this trend halted as a result of the [2001] conflict in the country, when Macedonia was seen as a high-risk country,” he said.

“At the same time, Romania and Bulgaria started offering their own services to foreign productions, which is why these countries each earns more than 200 million euros a year from film makers,” he added.

Two years ago, Anastasov says his company, Sektor film, received an offer from a well-known Hollywood production company to shoot part of a big-budget film in Macedonia. But the company pulled out for lack of a tax-break policy.

“The filming took place in a country that has those kind of tax incentives,” he said. “Another production was also interested last year, and in that case we lost 40-million-euro project because the producers were again attracted by the low tax policies of another country, which returns 20 per cent of the total budget spent in that country,” Anastasov continued.

Naskov’s Kino oko company worked for Luc Besson’s EuropaCorp in 2008, when actor and director Rie Rasmusen was filming Human zoo in Macedonia, but this was a rare case.

“The first thing they always ask you is what kind of tax incentives your country has, Naskov said. “It is one of the most important factors that concern them in their decision about where to film.”

Aneta Lesnikovska, who directed the first Balkan film in the so-called dogma style [after the movement of Danish director Lars von Trier], Does it hurt, in 2007, said that tax incentives help many NGOs and cultural institutions, which is one reason why Macedonia should seriously consider the possibilities.

“It is important that the framing of the law is left to domestic experts in the field of movie and finance, because these people are the best informed about the conditions in which it will operate,” Lesnikovska said.

This director’s work with colleagues from other countries has taught her the importance of tax incentives. “All foreign producers are constantly seeking attractive locations to film that offer favourable tax breaks,” she added.

Vladimir Blazevski, of the Macedonian faculty for dramatic arts, a well-known film director and screenplay writer, agrees that foreign film productions would probably shoot more often in Macedonia if the country not only supplied tax incentives but also offered some infrastructure for support of film crews.

“The benefits of such tax breaks may be great, average, or just humble, but all three would be better than nothing, which is the situation now,” he said.

Baseski says Macedonia’s authorities need to get moving, as putting tax changes into effect takes time. “It took six years for the Czech Republic to implement that law,” he said.

Naskov agrees. Neighbouring Serbia had recently introduced tax incentives for film companies, he noted. He added that the Hollywood Reporter ran an article last October saying that Serbian president Boris Tadic was urging film companies to shoot in Serbia. Macedonia was in danger of missing the boat.

Maja Nedelkovska is journalist in daily Vreme. Balkan Insight is BIRN’s online publication. This article is funded under the BICCED project, supported by the Swiss Cultural Programme.