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The Dark Side of Olivewood

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We recently read an article published on November 7 in the Financial Mirror (Olivewood trying to reinvent itself) about the Cyprus filming plan, although interesting, was far from the truth.

You can dress a pig like a swan and put makeup on it, but it is still a pig.

Reference was made to ‘Jiu Jitsu’ and how our production did not comply with the rules.

This is simply not true.

We have worked worldwide with TV and film tax credits and cash rebates and at no time has any government acted as if we were never there or ever spent a dime, as Cyprus has.

Government officials are desperately trying to invent a “success story” around the Audiovisual Filming Plan.

They often talk about promotion activities and developments, like the evolution of a studio; references are made to ‘Jiu Jitsu’ and ‘Man of War’ (without naming the production), which we, as producers, decided to withdraw from Cyprus.

Here are the facts.

Both Altadium Group’s ‘SOS’ and our ‘Jiu Jitsu’ were produced in 2019.

The plan was to reimburse producers within 3-5 months from completion.

We are now at the end of 2021, and we have not heard of any rebate paid so far to any producer.

‘Jiu Jitsu’ has not received a cent.

One of our partners, who has produced over a dozen major films since we completed ‘Jiu Jitsu’, has been asked by several Hollywood studios and producers if Cyprus ever paid the cash rebate for ‘Jiu Jitsu’ and his answer, of course, is “no, they refuse to pay,” suggesting everyone stay away from Cyprus.

If Cyprus wants to reinvent the film cash rebate, it needs to change the government officials who made false promises.

Four years since the filming plan was enacted, the Cyprus Cash Rebate Certificate is still a non-bankable instrument.

The producer, to make a film, needs funding upfront.

A cash rebate, in principle, requires the money is used first on eligible production spending, audited, and taxed and then reimbursed at the designated inducement rate.

To make a picture, a loan advance is required from a local bank.

This is a simple process that can take effect with frequent interim audited cycles to confirm spending eligibility as the project progresses.

As a result of non-payment by the Cyprus government, local banks are reluctant and uncomfortable to finance pictures based on the Cash Rebate Certificate.

Instead of standing up and supporting its own instrument, the government leaves this job to the producers.

After failing to get local banks interested in the Cyprus Cash Rebate Certificate, we brought in private investors to support ‘Jiu Jitsu’.

The certificate was assigned to the investors.

Funds poured into the movie in 2019; people were employed, famous actors came to Cyprus, it gained publicity as a production destination, taxes were paid and are still collected since the investment took place.

But two years on, the government is still not paying.

If this was not enough when we found a local bank to support “Man of War”, the Auditor General created a climate of fear and suspicion through illicit references without knowledge of the subject.

The bank withdrew its funding, considering that the filming plan is not credible since ‘Jiu Jitsu’ payment was also pending.

Instead of the government ‘experts’ working towards resolving these fundamental matters for the success of the filming plan, they have done their best to render it less competitive with completely irrational new ideas.

These government officials do not understand this industry, microeconomics, or the competition with surrounding countries.

It is inferred that the screenplay must be produced in Cyprus. Which studio or producer would come to Cyprus to sit down locally and write a script?

When digital nomads work from a laptop at home or remotely, how do you enforce this?

This approach cuts off all foreign producers who want to come to Cyprus and spend their monies, provide jobs.

The question remains, who is trying to kill the plan from inside and who would benefit from such a failure?

The next misleading evolution of the plan was to increase the rebate from 35% to 40% and promote this to the outside world.

But this is not true.

What they did was to increase the inducement on the below-the-line items such as hotels, car rentals, catering and general local spending to a 40% rebate and reduce the non-scalable items such as the producer, director, actors and screenplay fees to 25%.

These items bear a 10% withholding tax, and the result is that the producer who decides to come to Cyprus is induced now by a 15% net rebate.

Again, this reduces the taxable amounts for these items in absolute terms as they are now significantly compromised.

It means fewer state taxes.

The biggest impact from this decision is that a producer, the ultimate decision-maker to inject money in Cyprus, or Malta or Greece, will now think twice before choosing Cyprus when the other countries offer 40% across the board against all production eligible expenses, external or local.

Before the “improved” revision, the Cyprus plan offered 35% across the board.

If the inducement is so uncompetitively low, there is no point in offering 40% instead of 35% for the rest, as the producer will not come to Cyprus in the first place.

These local services can be found anywhere in the world and, in some cases, even cheaper, especially in seasoned and experienced regions where the industry is thriving, with competition providing lower prices on cameras and other equipment necessary.

We want to ask the “experts” to tell us whether all the money spent in Cyprus in 2019 with 8,200 night stays, 204 locals, employed, and other spending was a phantom?

We, as producers, delivered on all our promises, and of course, this disgraceful situation has found its way to the local courts.

Was this the vision of bringing producers to Cyprus?

 

By Dimitri Logothetis & Chris Economides, producers of ‘Jiu Jitsu’