Punjab cinema owners face 65% tax levy

Provincial government sends notice, informs industry of impending liability from January 1

LAHORE: Punjab’s cinema industry is set for a jolt at the start of the New Year and ticket prices are likely to shoot up.

After a self-imposed ban on screening Indian movies, which industry players removed just recently, cinema owners are now facing an Entertainment Duty tax from January 1, 2017.

In a notice to cinema owners, the Punjab Excise and Taxation department warned them of the impending liability - a 65% duty on admission tickets - that had so far been waived as a tax holiday for the last decade.

Cinema owners, which will be collecting the amount on behalf of the provincial government, are likely to pass on the increase in cost to consumers. This could result in a ticket price going up from Rs500 to Rs825 If cinema owners decide to pass on the entire burden onto the consumer.



Under the Entertainment Duty Act 1958, the Punjab government will collect this tax from January 1, 2017 after a decade-long hiatus that was meant to promote investment in the entertainment industry.

During this time, the culture of multiplexes picked up, translating to an almost 600% increase in the amount of screens in the country. From just 20-25 screens in Pakistan in 2006, the number now stands between 120-125.

The notice, which was sent on Thursday, said that the “entertainment industry is informed and being bounded to remain prepared for the routine payment of entertainment duty upon admission tickets … . In accordance, you (entertainment industry) are required to keep the concerned record ready … as the staff of this office is going to regularly check your Entertainment House (Cinema) from January 1, 2017”.

The cinema industry has had a good run since 2007. A government-led ban on screening Indian movies was lifted in 2007 following which billions poured into the sector, resulting in a six-fold increase in the number of screens. Punjab led the way with a 50% share in revenue followed by Karachi.

“This could be the final nail in the coffin as exhibitors have been struggling to survive recently, especially amid the absence of Indian content,” Super Cinema General Manager Khorem Gultasab told The Express Tribune.

Pakistan Film Exhibitors Association Chairman Zohair Lashari said tax breaks have helped strengthen a nascent industry, but fresh investments will now stop. “Billions of rupees have been invested in this industry, but all ongoing and fresh investments would be stalled now,” said Lashari, hoping that Punjab chief minister’s intervention would resolve cinema owners’ issue.



Meanwhile, Punjab Finance Minister Doctor Ayesha Ghaus Pasha said the government does not intend to cause harm to any industry. “We don’t want to cause a negative impact to any industry, but we have to collect taxes - especially from those sectors that have the ability to pay them,” Pasha told The Express Tribune.

She said the culture of extending tax breaks needed to stop in order to generate funds to finance different ongoing infrastructure projects. “I will meet the minister of excise and taxation and the exhibitors to resolve this issue,” Pasha added.

Published in The Express Tribune, December 30^th, 2016.

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