Efforts to promote Cyprus as a filming location, dubbed Olivewood, has hit a brick wall as a law offering reimbursements and tax incentives to entice film companies was sent back to parliament by President Nicos Anastasiades.
The bill was approved by MPs on 2 November with an amendment which was to allow individuals, as well as companies, to be eligible to take part in the scheme. In his referral to parliament, President Anastasiades said this conflicted with what the government had put forward.
He refused to sign the law, arguing that parliament had widened the scope of the bill, without any reference to small to medium-sized companies, which was a basic element in the provision of tax breaks.
The President also argued that the bill was unconstitutional as the law was retroactive.
“In the form it was voted, but also the way it had been submitted by the executive power, the law comes into force retroactively on January 1, 2018,” the president said in a letter to parliament.
Talking before the House’s Legal Affairs Committee, Theophanis Theophanous, the Commissioner for State Aid Control, said that the bill is in violation of both European and local laws.
He added that the element of the retroactiveness of the bill goes against the philosophy of an incentive scheme.
Theophanous comments enraged MPs who wondered how the Legal Service did not spot the constitutional conflict, with opposition MPs wondering whether the government had purposely ignored the fact that the bill was in violation with the laws.
Opposition leader AKEL’s spokesman Stefanos Stefanou, said: “The government must not mislead the House and must check whether laws proposed are in compliance with the constitution before sending them off to the parliament”.
The Cyprus Greens leader George Perdikis said that the whole thing “is a scandal which was revealed by chance. It would appear that the government brought a bill before the house which aimed at benefitting a certain group of people. It is a big scam which we will not support”.
The house now has 15 days to respond to the President’s referral, by either accepting it and amending the law or send it back to the President, in which case the law will be brought before a Constitutional Tribunal.
Cyprus directors are extremely disappointed with the development as high hopes were pinned on the likes of Paramount and Universal Pictures coming, especially after the government’s foreign investment arm, Invest Cyprus organised the first Cyprus Film Summit on 8 October, essentially announcing the incentive scheme for studios to film on the island.
Sources from the local film industry expressed their disappointment as “it would appear, there was much ado about nothing”.
At the summit, Finance Minister Harris Georgiades told the audience how Cyprus was put to use it’s “unutilised potential as it tries to come into the spotlight of the global film industry”.
A film industry source told the Financial; Mirror: “At that time we had warned officials about the possibility of the local industry and Cyprus as a country, eventually being exposed, as the summit was held before the bill had even been discussed in the parliament”.
The law was approved on 2 November and referred back to the House by Anastasiades on 28 November.
“Unfortunately, as things would appear, local filmmakers are to miss out on the opportunity to work with big film producers as the law is not expected to be voted in by the end of the year, and in any case the country’s credibility towards filmmakers internationally has taken a blow,” said the industry source.