Cyprus’ audiovisual industry, dubbed Olivewood, has tarnished its reputation, as producers of a Hollywood production take the government to court for not fulfilling its €8.5 mln rebate obligations.
Hollywood producers of Jiu Jitsu filmed entirely in Cyprus in 2019, starring Oscar winner Nicolas Cage, are to sue the Cyprus Republic for not keeping its end of the deal in a rebate scheme which brought them to the island.
Jiu Jitsu producers told the Financial Mirror they are suing the Republic after their experience with the government’s incentive scheme left a sour taste.
Lawsuits have been filed against the Auditor General Odysseas Michaelides for “libel and defamation” and the Republic for damages.
Chris Economides, a board member of LBE JIU-JITSU AVC, set up in Cyprus by the film producers, believes the future of ‘Olivewood’ is at risk as his colleagues, including Jiu Jitsu’s director Demitri Logothetis, will boycott Cyprus.
The team was all set for their second venture in Cyprus to film ‘Man of War’ at the beginning of the year, which would have cost €37 mln with plans to invest $125 mln in this and another five films.
Economides said Cyprus had missed a golden opportunity to promote itself as a filming destination by not keeping its part of the bargain in comments to the Financial Mirror.
He is puzzled over the image Cyprus is sending out when a major film production had to resort to the justice system to get the rebate promised by the scheme.
Producers are fuming at Auditor-General Michaelides for, as they claim, for damaging their reputation and shackling the budget for Jiu Jitsu.
“Cyprus simply did not deliver.
“We feel saddened as we believe that we have fallen victim to the whims of the people who do not have a clue when it comes to financial auditing and audiovisual productions”.
Conflict of interest
Talking to MPs on Thursday, the Auditor General claimed the scheme to promote the film industry in Cyprus appears to “have been tainted by conflicts of interest and self-enrichment”.
He said the former chairman of Invest Cyprus – the vehicle for promoting the scheme – also happened to be a partner in KPMG, the firm that audited the companies applying for the scheme.
In effect, Michaelides asserted, the chairman of Invest Cyprus would prepare the recommendations to the government, and then his employee at Invest Cyprus took the applications and reviewed them.
Economides pointed out that although the director of Invest Cyprus chaired the review board, “his views could be overridden by the other three board members.
“The Ministry of Finance also has a representative on the board”.
He argued the film had promoted the island as a tourism and film destination, physically boosting the island’s economy.
“The movie ‘Jiu Jitsu’ racked up around 8,200 hotel nights for its cast and crew, costing around €2 mln.
“We have employed more than 300 people, of which 204 were locals.
“We have built a marvellous set (using local contractors) that cost around €460,000, which was offered to Cyprus as a gift from the producers’ team.
“We kept our end of the bargain.
“We brought big names to star in the film and an accredited director.
“We hired local actors and crew. We paid all our taxes, but Cyprus did not keep its end of the deal.”
The producers ended up claiming a rebate of around €8.5 mln, which had been approved after a heated debate in the parliament.
However, the producers have yet to see any refunding flow into their accounts.
Jiu Jitsu’s premiered in early 2020 and was screened in cinemas or released on DVD in over 40 countries.
The film scheme provides Cypriot and foreign producers with incentives, cash rebates and/or tax credits of up to 35% on qualifying production expenditures.
Also, it provides tax allowances of 20% for investment in infrastructure and equipment.
Cyprus relied on its incentive scheme to reboot its audiovisual industry, bringing in big names from international film.
Invest Cyprus argues the incentive scheme is the cheapest and most effective way to promote the island abroad.
Earlier last year, Invest Cyprus said that Bollywood stakeholders had exhibited interest.
