Movie Investment Incentives - Hawaii's generous tax incentives.

Hawaii's Movie Investment Tax Credit

First, the production would be required to spend 75 percent of the budget in Hawaii. In order to qualify, companies need to stay in business in Hawaii for at least five years and should have copyright ownership of the picture. The downside of shooting in Hawaii is that it's more costly than many other locations, beacuse it's a union state.

Producer Doug Mankoff (The Big Empty) "The Hawaiian incentive is the most impressive effort of any state, by far," says Doug who is opening a Hawaiian subsidiary. "A program that eliminates financial risk for Hawaiian movie investors, and gives the other film investors a priority return, is tremendously attractive to producers."

Hawaii's Investment Tax Credit provides a 100% return on cash investments over five years. 35% credit the first year of investment, 25% the second, 20% the third, and 10% the fourth and fifth years. The credit return for investments goes up to $2 million a year, per taxpayer, and it applies against Hawaii income tax liability only. Which includes individuals or corporations paying Hawaii income tax, and by banks and insurance companies against their franchise and insurance premium tax.

In addition, if money from outside Hawaii is invested, the tax benefits can be allocated in such a manner so that the Hawaiian movie investors can obtain more than a 100 percent return. So for example, if a Hawaii investor put up $500,000 and an Arkansas film investor put up $500,000, the parties could agree to allocate all the tax credits to the Hawaii movie investor (since the Arkansas film investor doesn't pay taxes in Hawaii they are worthless to him anyway). Under this scenario, the Hawaii investors could receive a 200 percent return over five years. In return, the Arkansas investor could be given preferred recoupment or a greater share of the profits.

Two movies have been made with this incentive: Blue Crush and The Big Bounce. Blue Crush having recieved tax credits benefit of $15 to $18 million dollars.