ANCINE The Brazilian Film Agency ANCINE the Brazilian

ANCINE The Brazilian Film Agency

ANCINE, the Brazilian Film Agency, is a financially and administratively independent government agency, operating under the supervision of the Brazilian Ministry of Culture. It was established in September, 2001 to contribute to the regulation of, support to, and monitoring of the film industry in Brazil.

The Audiovisual Secretariat Together with ANCINE, the Audiovisual Secretariat is also part of the institutional framework which focuses on the development of the Brazilian AV sector. The Audiovisual Secretariat deals mostly with cultural issues, such as those relating to education and film heritage.

Export Programs Brazilian TV Producers (BTVP): BTVP is an audiovisual content export program created by the Brazilian Independent TV Producers Association in partnership with Apex-Brasil (Brazilian Trade and Investment Promotion Agency) and our Ministry of Culture. It promotes the independent audiovisual production abroad, enabling partnerships between Brazilian and foreign companies. Their main goals are to promote new co-production opportunities and develop international partnerships for TV and new media producers. BTVP is present in a variety of international events, such as MIPTVP, MIPCOM, Realscreen, Kidscreeen, BANFF, giving support to the participation of Brazilian producers.

Export Programs Cinema do Brasil: Cinema do Brasil is another export program established by Apex-Brasil and the Audiovisual Secretariat. Its goal is to increase the participation of the Brazilian audiovisual sector in the international market, offering strategic and logistical support to approximately 140 associated companies so that they can make co-productions and open markets for the distribution of their productions, thereby aggregating value to the image of the Brazilian film industry overseas. It is present in key international film festivals.

Film Commissions We have more than 20 film commissions in Brazil. They are local initiatives – funded by some states/cities in Brazil.

ANCINE - International Cooperation Our commitment to diversity is reflected in our interest in fostering international cooperation between Brazil and other countries in the audiovisual sector.

ANCINE - International Cooperation Why is international co-production important to us? It’s the most natural and efficient way to- - enable us to pool artistic and technical expertise; - enrich bilateral/multilateral exchanges towards substantial cultural benefits; - contribute to actual economic growth in the countries involved in the co-production; - provide broader access to public or subsidised funds to Brazilian and foreign filmmakers (in Brazil and abroad); - increase sales in the international space etc.

International Co-productions: framework According to the Brazilian legislation, international coproductions involving Brazil can be considered “official”, and therefore have national treatment in Brazil, in two different situations: a) without a treaty; b) under an international co-production treaty.

International Co-productions: non-treaty co-productions Eligibility criteria for non-treaty co-productions: a) the Brazilian co-production company shall own at least 40% of the rights to the film; b) 2/3 of the cast and crew must be comprised of Brazilian citizens or foreign citizens with a minimum residence of 3 years in Brazil. Note: In order to fulfill the “cast and crew requirement”, we check the following positions: author of the story; scriptwriter; director or animation director; director of photography (including those of 3 D animation); art director (including those of animation films); audio technician; image editor; sound designer or music composer; main actor(s) or actress(es), or main dubbers in the case of animation films; executive producer; sound editor or sound designer; sound mixer.

International Co-productions: treaty co-productions The requirements set out in the agreement concerned are to be met. We have co-production treaties with. Argentina, Canada, Chile, France, India, Italy, Germany, Spain, Portugal and Venezuela. We are also signatory to the Latin American Film Co-production Agreement.

International Co-productions: treaty co-productions Agreements signed, but not yet in force: - Brazil - Italy; - Brazil - Israel; - Brazil - United Kingdom. Agreements under negotiation: - Brazil - South Africa; - Brazil - New Zealand; - Brazil - French-speaking Belgium; - Brazil - Russia.

International Co-productions: treaty co-productions Remittances abroad Note: - The Brazilian legislation does not prohibit remittances abroad. - Remittances abroad are subject to taxation imposed by the Federal Government. - However, film/audiovisual production companies can include those taxes in the budget of a film (or audiovisual work) if they need to send remittances abroad, and they are allowed to use Brazilian public resources to cover the expenses they have with this kind of taxation provided that the budget is approved by Ancine beforehand.

ANCINE’s co-production financial support programs: With Portugal, Argentina, Uruguay (co-production programs) And Italy (development of co-productions) - The funds awarded by these programs are all nonrefundable. - A selection process takes place in each of the two countries concerned.

ANCINE’s co-production financial support programs: Example of a co-production financial support program: Example 1: Brazil-Portugal -Annual Amount Available: US$ 600. 000 -Amount per project: US$ 150. 000, 00 -Brazil awards 2 projects with a major Portuguese participation - Portugal awards 2 projects with a major Brazilian participation

ANCINE’s co-production financial support programs: Example 2: Brazil - Italy - Aimed at the development of co-production projects (fiction, animation and documentary) - Two types of financial support are granted: Line A: two projects by beginning authors are awarded 25, 000 Euros each (in each country) Line B: one project by a non-beginning author is awarded 30, 000 Euros in each country. Note: The authors awarded in Brazil take part in a training event in Italy and those awarded in Italy come to Brazil.

Main forms of government support to the audiovisual industry: In Brazil, there are different forms of government support for the Brazilian film industry. The main forms of financial support are: - INDIRECT SUPPORT through tax incentives; - DIRECT SUPPORT through the funding of ANCINE itself as well as local and federal funds (most important example: the Audiovisual Sector Fund - FSA).

Main forms of government support to the audiovisual industry: Note: Since official international co-productions have national treatment in their co-producers’ countries, all Brazilian government financial support sources are available for official co-productions involving Brazil.

Government support: Tax Incentives - Private and State-owned companies established in Brazil, as well as individual taxpayers, are allowed to invest part of their income tax obligations in the production of Brazilian films. - Tax incentives can also be invested in independent TV productions; film development and distribution; technical infra-structure; art theaters; and film festivals

Government support: Tax Incentives - To qualify for tax incentives, the companies responsible for the projects must apply to ANCINE on each specific project. - If the application is approved, ANCINE will follow up the project and ensure that the money allocated through tax incentives is spent properly.

Government support: Tax Incentives - Main mechanisms: a) Federal Law 8685 (established in 1993), the “Audiovisual Law”: Articles 1, 1 A, 3 and 3 A b) MP 2228 -1 (established in 2001), Article 39 Federal Law 8685, Article 1: Taxpayers can acquire equity in independent Brazilian films through the stock exchange. Corporations that make such an investment are entitled to a tax deduction – equivalent to the capital subscribed – of up to 3%, of their income tax due. This mechanism offers other advantages for corporations. First, the total amount invested can be deducted from taxable income as a trading expense; second, having the company logo displayed before each screening of the film helps to promote the corporate image. Projects which can benefit from this mechanism include production of features, medium-length films and shorts, as well as distribution, exhibition and technical infra-structure projects.

Government support: Tax Incentives - Main mechanisms: a) Federal Law 8685 (established in 1993), the “Audiovisual Law”: Articles 1, 1 A, 3 and 3 A b) MP 2228 -1 (established in 2001), Article 39 Federal Law 8685, Article 1 A: Under this Article, corporations are entitled to deduct up to 4% from their income tax - and individuals, up to 6% - on the condition that the said deduction be invested in the sponsorship of independent Brazilian film productions. However, under this mechanism, corporations are not entitled to any profits of the film. Once a project has received approval for funding, it is eligible to allocate up to R$ 4 million, if it benefits from either or both of the mechanisms described above.

Government support: Tax Incentives - Main mechanisms: a) Federal Law 8685 (established in 1993), the “Audiovisual Law”: Articles 1, 1 A, 3 and 3 A b) MP 2228 -1 (established in 2001), Article 39 Federal Law 8685, Article 3: According to Brazilian legislation, remittances abroad of profits from the exploitation of foreign audiovisual works in Brazil are subject to tax at a rate of 25%. However, under Article 3, these taxpayers can get a 70% tax deduction, provided that these resources are invested in the development of independent Brazilian feature films, or in the co-production of independent Brazilian films, TV films or miniseries. This mechanism has generated important partnerships between Brazilian production companies and the world’s leading film distribution companies.

Government support: Tax Incentives - Main mechanisms: a) Federal Law 8685 (established in 1993), the “Audiovisual Law”: Articles 1, 1 A, 3 and 3 A b) MP 2228 -1 (established in 2001), Article 39 Federal Law 8685, Article 3 A: This mechanism benefits television broadcasters, including subscription television programmers, who can get a 70% deduction on tax owed on remittances abroad of profits from the broadcasting or narrowcasting of audiovisual works and events in Brazil, provided that they invest an equivalent amount in the development of independent Brazilian feature films or in the co-production of independent Brazilian films and videos, documentaries, TV films and miniseries.

Government support: Tax Incentives - Main mechanisms: a) Federal Law 8685 (established in 1993), the “Audiovisual Law”: Articles 1, 1 A, 3 and 3 A b) MP 2228 -1 (established in 2001), Article 39 MP 2228 -1, Article 39: Under Article 39, international subscription television programmers are exempt from paying the 11% CONDECINE (Contribution to the Development of a National Film Industry) tax on remittances abroad of profits stemming from the exploitation of audiovisual works, provided that they invest an amount equivalent to 3% of the remittance value in the production of independent Brazilian films and videos of any length and in the co-production of independent Brazilian films, videos, TV films, miniseries and educational and cultural television programs.

Government support: Resources allocated through tax incentives to films released 2010 R$ 112, 726, 730. 88 2011 R$ 123, 836, 327. 19 2012 R$ 111, 854, 112. 57 2013 R$ 154, 466, 549. 82 Total R$ 502, 883, 720. 46

Government support: The Audiovisual Sector Fund (FSA) FSA is a federal fund, aimed at developing the Brazilian audiovisual industry. It was created in 2006, by Federal Law 11437/2006, Art. 1, and restructured in 2013.

Government support: The Audiovisual Sector Fund (FSA) FSA’s resources come mainly from the “Contribution to the Development of a National Film Industry” (CONDECINE), a tax applied to: - the broadcasting, production, licensing and distribution of film and video works for commercial purposes; - service providers that distribute audiovisual content, such as telecommunications companies and pay-tv operators.

Government support: The Audiovisual Sector Fund (FSA) FSA nurtures all segments of the audiovisual industry through three programs and different lines of actions. Programs: 1) PRODECINE: Dedicated to supporting the development of Brazilian film (6 lines of action) 2) PRODAV: Dedicated to supporting the development of the Brazilian audiovisual sector (8 lines of action) 3) A Movie Theatre Near You: Dedicated to supporting the development of infrastructure(5 lines of action)

Government support: The Audiovisual Sector Fund (FSA) PRODECINE LINE 1: Feature film production LINE 2: Feature film production (projects applied by a Brazilian distributor) LINE 3: Exploitation of feature films LINE 4: Supplementary aid to feature film production LINE 5: Feature film projects combining an innovative narrative form and artistic relevance Line 6: Co-production with latin-american countries

Government support: The Audiovisual Sector Fund (FSA) PRODAV LINE 1: Production of independent audiovisual works for television LINE 2: Production of independent audiovisual works for television (projects applied by Open or Pay TV programmers) LINE 3: Developmet of portfolios of projects by groups of creative work professionals LINE 4: Development laboratories LINE 5: Project development LINE 6: Automatic financial support LINE 7: Quality incentive program LINE 8: Content production for public TVs

Government support: The Audiovisual Sector Fund (FSA) A Movie Theatre Near You LINE 1: Opening of new movie theaters LINE 2: Opening of movie theaters in towns or cities with more than 20, 000 and less than 100, 000 inhabitants, where no cinemas are available LINE 3: Exemption of federal taxes due on import/acquisition of material/equipment for movie theaters LINE 4: Box-office control system LINE 5: Digitalization of movie theaters

Government support: The Audiovisual Sector Fund (FSA) The funds received from FSA are partially recoupable from the film’s net proceeds. The percentage of recoupment from each film project depends on various factors, including the overall budget, the total amount received and the percentage participation of FSA in the film’s budget. Investments made by FSA 2008/09 R$ 37, 000 2009/10 2010/11 2012/13 2013/14 Total R$ 87, 019, 867 R$ 84, 000 R$ 205, 000 R$ 548, 000 R$ 961, 019, 867

Main forms of government support to the audiovisual industry: Besides, we also have support programs to the participation of Brazilian films/projects/professionals in international events.

Local government support: Local fund raising In some cases, additional funding for audiovisual works can be raised from local initiatives/programs, such as: - Riofilme; - SP Cine. They provide additional funding in compliance with their own guidelines. Most local initiatives/programs of this kind require the Brazilian producer involved in the making of the film be established in their state/city.

Law 12, 485 (“Pay-TV Law”) Most important results: more Brazilian content on Brazilian Pay-TV and a booming market for the Brazilian audiovisual industry. Law 12, 485 establishes two kinds of quotas: a channel’s quota and a programming quota.

Law 12, 485 (“Pay-TV Law”) Quota per channel The channel’s quota establishes a minimum of three and a hours per week of Brazilian productions to be shown in prime time by Pay TV “channels of qualified space” – those that exhibit, in their prime time, a range of “dramaturgical” programs, such as fiction, documentaries, animation, sitcoms etc. Besides, half of these productions must be produced by independent Brazilian production companies.

Law 12, 485 (“Pay-TV Law”) The programming quota means that in each three “channels of qualified space” – that is, Pay TV channels that show dramaturgical programs in prime time – one must be a “Brazilian channel of qualified space”. The maximum programming quota is 12 Brazilian channels. Among those channels, one-third must be programmed by a Brazilian independent programmer. Moreover, among those Brazilian channels, at least two of them must show 12 hours of independent Brazilian production, 3 hours in prime time. The packages containing news channels must include another one with a different editorial line in order to maintain diversity of opinion and information.

Law 12, 485 (“Pay-TV Law”) This Federal Law came into force on Setember 12 th, 2011, and was regulated by ANCINE’s Normative Instruction N. 100 of May 29 th of 2012, and positive results can already be seen.

Law 12, 485 (“Pay-TV Law”) Hours of Brazilian content per year - 14 Channels - 2010 -2013 : 00: 01 : 00: 01 : 23: 55 : 00: 01 : 54: 29 : 00: 01 : 30: 00: 01 2010 2011 2012 2013 1608: 54: 28 1007: 29: 59 2006: 23: 54 3884: 00: 02 2013

Law 12, 485 (“Pay-TV Law”) Number of Brazilian independent production companies registered at ANCINE - 2010 -2014 Total of Brazilian Production Companies Total of Brazilian Independent Production Companies 2010 831 165 2011 804 200 2012 1012 211 2013 1019 300 2014 928 641

The Brazilian Film Market in Figures Number of Brazilian films released 2012 2013 2014² 83 127¹ 114 ¹Highest number of films released during a year in the history of Brazilian film. ²Preliminary figures. Number of films released (Brazilian & foreign films) 2012 2013 2014¹ 325 397 387 ¹Preliminary figures.

The Brazilian Film Market in Figures Theater Tickets sold in Brazil 2012 2013 2014¹ 146, 593, 494 149, 512, 084 155, 598, 138 ¹Preliminary figures. Theater Tickets sold in Brazil for Brazilian films 2012 2013 2014¹ 15, 649, 980 27, 760, 849² 19, 030, 900 ¹Preliminary figures. ²Best results in the last two decades Note: In 2012, 5 Brazilian films had each more than 1 million tickets sold In 2013, 10 Brazilian films had each more than 1 million tickets sold In 2014, 6 Brazilian films had each more than 1 million tickets sold Brazilian Market share (considering tickets sold) 2012 2013 2014¹ 10. 7% 18. 6% 12. 2% ¹Preliminary figures.

The Brazilian Film Market in Figures Box office revenue in Brazil 2012 2013 2014¹ R$ 1, 613, 983, 926. 32 R$ 1, 753, 160, 293. 52 R$ 1, 956, 226, 401. 4 (around 500 million euros) (around 550 million euros) (around 610 million euros) ¹Preliminary figures. Box office revenue in Brazil for Brazilian films 2012 2013 2014¹ R$ 158, 067, 364. 28 R$ 296, 733, 096. 64 R$ 221, 281, 224. 21 (around 50 million euros) (around 90 million euros) (around 70 million euros) ¹Preliminary figures. Brazilian market share (considering box office revenue) ¹Preliminary figures. 2012 2013 2014¹ 9. 8% 16. 9% 11, 30%

The Brazilian Film Market in Figures Average Ticket Price at theater in Brazil 2012 2013 2014¹ R$ 11. 01 R$ 11. 73 R$ 12. 57 (around 3. 50 euros) (around 3. 60 euros) (around 3. 20 euros) ¹Preliminary figures. Number oh theater screens in Brazil ¹Preliminary figures. 2012 2013 2014¹ 2, 517 2, 679 2, 830

Film co-productions between Brazil and other countries carried out from 2005 to 2014 - Total of 96 international co-productions Co-producer country Number of films Argentina 10 Chile / Spain 2 Argentina / Spain 1 Spain / Russia / Portugal 1 Argentina / France 1 India 1 United States of America 6 Italy 2 France 10 Italy/Portugal/France/Spain/Mozambique 1 France / Uruguay 1 Mexico 2 France/Canada 1 Uruguay 1 Lebanon 1 Uruguay/Germany 1 Belgium 1 Germany 4 Turkey 1 Germany / Portugal / France 1 Uruguay / Spain 1 Germany / Spain 1 Portugal 17 Germany/England 1 Portugal / Spain 2 Germany / France 1 Portugal / Mexico 1 Japan / Canada 1 Portugal / Argentina 2 Venezuela 1 Spain 5 Colombia 2 Cuba / Spain 1 Hong Kong 1 Chile 3 Holland 1 Chile / Argentina 2 England 4

Co-production involving Brazil and France International Co-production Year¹ Co-productions involving a Brazilian co-producer Co-productions involving Brazil and France 2014 14 2 2013 21 3 2012 9 2 2011 15 2 2010 9 1 2009 6 0 2008 12 2 2007 6 1 2006 3 2 2005 1 0 Total 96 15 ¹ The reference year is established by the date of commercial release in theaters in Brazil.

Thank you! Eduardo Valente assessoria. internacional@ancine. gov. br