Punjab considering another tax break for cinema owners

Will reduce rate in case tax holiday is not approved

LAHORE: With the recent emphasis on and revival of the country’s cinema industry, the Punjab Excise and Taxation department is looking to give an extra five-year tax holiday to the province’s movie screening business in a bid to maintain the flow of investments in the sector.



In addition to giving yet another tax holiday to new multiplexes, a proposal of flat tax for old cinemas is also under consideration, though nothing has been finalised yet. “We have crafted a few proposals for imposition of entertainment duty tax in Punjab, but the final decision will be made by Punjab Chief Minister Shahbaz Sharif,” said provincial minister of Excise and taxation Mian Mujtaba Shujaur Rehman, while talking to The Express Tribune.

Till date we have not collected any tax from cinema owners, Rehman added.

He further said that entertainment duty tax has been reduced to 20% from 65% in Punjab, which is currently levied on theatres. “In case tax is implemented and CM refuses to give further tax breaks, then it will be a flat rate. We won’t follow Sindh or cantonment board models, which charge Rs10 to Rs30 per seat”, Rehman said.



He added that per-seat tax collection can possibly open up another avenue of corruption so it is better to charge cinemas Rs2,000 to Rs4,000 tax per show. As per cinema owners, the industry desperately needs another tax break followed by screening of Indian content to have better footfall in cinemas. The recent tax breaks have encouraged many investors who have poured billions of rupees to modern multiplex screens. A single multiplex screen costs almost Rs50 million and currently around 105 multiplex screens have been set up all over Pakistan out of which around 85 are in Punjab.

Investors are now moving towards second-tier cities to capture their markets but the ban on Indian content followed by the end of the tax holiday are potential hindrances.



Additionally, many have terminated almost 30% of their workforce and shut down half of existing screens to sustain. Super Cinema Co-founder Ramzan Sheikh told The Express Tribune that this tax break has allowed the cinema culture to flourish in an entertainment-starved country. “Taxation is one aspect, the flow of investments is helping in reviving the local film industry and their supporting staff and departments, which in turn is generating massive economic activity,” Sheikh said.

Pakistan Film Exhibitors Association Chairman Zohair Lashari said that a presentation was given to the provincial department that requested them for at least a further three-year tax break, followed by a fixed rate. “The long-term roadmap should be decided so it becomes a part of the finance act,” Lashari added.

Published in The Express Tribune, January 15^th, 2017.

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