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Decree 34 of May 4, 2009

EXECUTIVE DECREE NO. 34 OF MAY 4, 2009, THROUGH WHICH LAW NO. 36 OF JULY 19, 2007 IS REGULATED, WHICH PROMOTES THE FILMMAKING AND AUDIOVISUAL INDUSTRY AND SETS FORTH OTHER STIPULATIONS.

By means of this Executive Decree No. 34 it is stipulated that the Fund for National Film and Audiovisual Development, created through Law 36 of 2007, will be used to support the activities of making, producing, commercializing and exhibiting national film and audiovisual production.

In order to become benefited by the Fund for National Film and Audiovisual Development, applicants must be registered in the Registry of National Film Activities of the Instituto Nacional de Cultura (Institute for National Culture). Likewise, through the Registry of National Film Activities the registration and verification of film festivals and exhibitions to be made in the territory of the Republic ofPanama will be facilitated, through the granting of certifications of qualification for their presentations.

The Institute for National Culture will periodically make a catalog of Panamanian productions and their stage of development, as well as of producer companies and of the professionals of the Panamanian audiovisual industry, taking as its basis the Registry of National Film Activities.

A national film and audiovisual joint production is any production that has the following requisites: it will be produced jointly by Panamanian and foreign movie companies; the national monetary participation will not be less than twenty percent (20%); the technical and artistic Panamanian participation that takes part in it will be equivalent at least to the 70% of the national monetary participation and their experience or competence in the corresponding area of filmmaking must be proven.

Furthermore, a screen quota must be paid for the benefit of Panamanian audiovisual and film works by audiovisual and film exhibitors and operators of open television, in accordance with the following terms: movie theaters will schedule, within every year, national audiovisual film works to a ten percent (10%) as a minimum, of the total of their movies to be played, depending on the national film and audiovisual supply; if such quota is not available, it will be filled with film works from Iberian-American countries. Operators of open television whose scheduling includes short, middle or feature-length films and miniseries of foreign production, may allocate every year as a minimum, ten percent (10%) of their scheduling for feature-length films, soap operas and movies for television classified as national production.

The Institute for National Culture will have the responsibility of supervising compliance with the screen quota established in accordance with this regulation.

It is set forth that at least fifty percent (50%) of the resources of the Fund for National Film and Audiovisual Development will be allocated for the creation, production, joint production and, in general, for the making of Panamanian audiovisual and film works.

The Institute for National Culture will administer the Fund for National Film and Audiovisual Development, which will be used to support the activities of making, producing, commercializing and exhibiting the film and audiovisual production, such fund will have a capital different from the capital of the Institute for National Culture and will be subjected to the controls and audits of the Contraloría General de la República (General Comptroller’s Office of the Republic).

Regarding resources, the Institute for National Culture has the obligation to annually announce contests in all the categories of audiovisual and film activities; to spread throughout the Country the rules of the contests, to disclose the results of the contests within five days after the panel of judges reaches a decision, through mass media of national scope.

Regarding national and international scholarships, the Institute for National Culture will make agreements with the educational institutions of the country, both public and private, so that they channel the applications of those interested towards the respective evaluating committee.

Regarding the granting of incentives and support for production, the benefits are linked to the following obligations, in addition to the obligations established by  the respective contract, of communicating to the Institute for National Culture the date of beginning and end of filming, within fifteen days before and thirty days after the respective factual  dates; to prove compliance with the corresponding project through the submittal of the completed audiovisual film work along with documents that prove the expenses it generated, the proof of other supports or subventions received, as well as any other documents required by the Institute for National Culture, to accept compliance with the cycle of commercial utilization of the film and audiovisual work.

International exhibits must have the authorization of the producer of the work or the holder of authorship rights.

The Institute for National Culture will not use the resources of the Fund for National Film and Audiovisual Development to act as a producer or joint producer or share risks in the projects.

The beneficiaries of the incentives and support to the production will sign a contract with the Institute for National Culture, in which it will be established the modality of the benefit, the amount of the help granted and the obligations of the beneficiary, in accordance with the basis of the respective contest or scholarship.

The Institute for National Culture may grant supports as donation or sponsorship, insofar as it is possible due to the budgetary availability of the Fund for National Film and Audiovisual Development, to the producers of Panamanian film and audiovisual works nominated or selected in official competition in international video and film festivals, for expenses of participation and promotion during the particular festival or awards ceremony, for the organization and development in the Republic of Panama of film festivals, exhibits of films, movie contests and competitions of artistic or cultural relevance, that are duly registered in the Institute for National Culture, and for the expenses of distribution, copies and publicity that are necessary to carry out the plans of national and international distribution of Panamanian film and audiovisual works.

The Fund for National Film and Audiovisual Development will be allocated to support preferably projects of exhibition of Panamanian film and audiovisual works benefited in the contests hosted by the Institute for National Culture.

Likewise, incentives and supports may be provided through processes of selection of contractors or direct application for donations or support, to projects of creation or maintenance of movie theaters in rural areas, indigenous comarcas or areas of low profitability, which must have the approval of the Institute for National Culture.

The national audiovisual heritage consists of all moving images, without considering whether they are included in completed works, independently of their commercial nature, as long as they manifest Panamanian creativity or have historical, cultural or scientific relevance; such heritage is a part of the cultural heritage of the nation and, consequently, the general regime of protection and defense of this heritage that is to be set forth within a corresponding legislation is applicable to it.

Resources from the Fund for National Film and Audiovisual Development may be allocated, after a call for a contest or a direct request, in order to support projects of promotion and dissemination of audiovisual culture in the Panamanian population that envision the activities of theorical, historical and technical formation in the area of filmmaking, audivisual activities and social communication, development by movie clubs and non governmental organizations for cultural endeavors.

Likewise, the Film Commission of Panama is created as an organization attached to the Viceministry of Commerce and Industry, which will have the purpose of contributing in the design and execution of investment and commercialization policies of the State’s film and audiovisual industry.

Regarding the rendering of services provided by the Technical Secretariat of the Film Commission of Panama, the following rates are established:

1. National Registry of Film and Audiovisual Industry, for the services of filing and registration of the film and audiovisual industry will pay weekly rates, which will be classified as follows:

A. Long stay productions: 100% national productions B/. 50.00, foreign productions or foreign joint productions B/.25.00, joint national/foreign productions B/.150.00, productions or joint productions for the television industry B/.50.00

B. Short stay foreign productions: Fixed and sole rate of B/.50.00

2. Complementary services to the National Registry of the Film and Audiovisual Industry: it will be charged to all film and audiovisual production, a rate of a hundred balboas (B/.100.00) daily for a government employee attached to the project in case of relocation of such personnel to locations outside of the District of Panama and of the Special District of San Miguelito.

3. Services previous to the National Registry of the Film and Audiovisual Industry. All services rendered by the employees of the Technical Secretariat of the Film Commission of Panama to non-registered productions or companies of the filmmaking and audiovisual industry, including the service of location scouting, will be charged a rate that will fluctuate from fifty balboas (B/.50.00) to three hundred balboas (B/.300.00) daily for personnel attached to the project, depending on its location, in the District of Panama and the Special District of San Miguelito (B/.50.00), West area and East Panama B/.75.00, Provinces of Colón, Coclé and Veraguas B/.150.00, Provinces of Los Santos, Herrera and Islands of the Province of Panama B/.200.00, Provinces of Chiriquí and Ngobé Bugle Comarca B/.250.00, Provinces of Darién and Bocas del Toro, and San Blas Comarca B/.300.00.

Such rates will be paid directly to the National Bank of Panama or electronically through the system of Sole Counter for Investment Procedures to the special account under the management and responsibility of the Viceminister of Foreign Commerce or to the accounts provided by the National Treasury, as it may correspond, and the corresponding allocations will be made to the Panama Film Commission to pay the expenses due to services rendered to the corresponding film and audiovisual productions.

The revenues accrued from the rate for services of filing and registering of the film and audivisual industry, will be a twenty percent (20%) of the rate charged for the services rendered by the National Registry of the Film and Audiovisual Industry, allocated to the Fund for the Development of the National Film and Audiovisual Industry, the remaining eighty percent (80%), will be allocated to pay exclusively for the expenses incurred by the rendering of the services offered by the National Registry of the Film and Audiovisual Industry.

Exceptions to the charging of the rate for the services of filing and registration of the film and audiovisual industry to those film and audiovisual productions that earned awards in the different contests to promote the production of film and audiovisual projects through the Fund of Film and Audiovisual Develpment with their respective certification, will be made whenever the amount of the investment of the film and audiovisual productions of Panamanian nationality does not exceed fifty thousand balboas (B/.50,000.00) and to such productions listed as documentary of an educative, scientific or historical nature, developed one hundred percent (100%), in the territory of the Republic of Panama and under the category of national production.

The profit from a film and audiovisual work must be registered in the National Registry of the Film and Audiovisual Industry in order to obtain tax benefits and in the Sole Counter for Proceedings established by Law 36 of 2007, such works may be national or foreign or made in the regime of joint national and foreign production.

The Official Registry of Special Areas Assigned for the Development of the Film and Audiovisual Industry is created. It will be managed by the Technical Secretariat of the Film Commission of Panama, which will grant the licenses of Promoter, licenses of Operator, license of User of Special Area assigned for the development of the film and audiovisual industry, and license of temporary user of Special Area assigned for the development of the film and audiovisual industry.

The role of Promoter and Operator may be performed by the same person, either a natural person or a legal entity, and they may be engaged in the activities of the film and audiovisual industry of Panama or not.

Initial investments in special areas assigned for the development of film and audiovisual industry may not be inferior to the amount of two hundred fifty thousand balboas (B/.250,000.00).

Natural persons or legal entities that desire to set up within the special areas assigned for the development of the film and audiovisual industry, in order to be able to obtain the benefits granted by Law 25 of 1992, must submit to the Technical Secretariat of the Film Commission of Panama a request for user’s license and the corresponding documentation, as well as financial statements duly certified by a public authorized accountant. In case of new corporations, such documents will be substituted by a balance sheet of the beginning of operations duly certified by a public authorized accountant or a proper expert accountant of the Republic of Panama.

The Sole Counter for Investment Procedures is created for the purpose that investors subject to Law 36 of 2007 and this regulation may process in an easy and efficient way the permits and other procedures related to the uses of locations, facilities, visas or any other documents necessary for the carrying out of the film and audiovisual productions and proceedings through electronic means.

The foreign personnel who offer services to film or audiovisual productions in the National Registry of the Film and Audiovisual Industry, or all foreign investors who make a film or audiovisual investment, must procure to obtain the corresponding visas in the Sole Counter for Investment Procedures of the National Directorate for the Promotion of Investment of the Viceministry of Foreign Commerce.

The same rules will apply to the visas of the special areas assigned for the development of the film and audiovisual industry.

The documents and payments required for the managing and issuance of the visas referred to in Law 36 of 2007 may be submitted and made through electronic formats and mechanisms according to the corresponding specifications established by the electronic system of Sole Counter for Investment Procedures of the National Directorate of Investment Promotion of the Viceministry of Foreign Commerce, in agreement with the National Service of Migration of the Ministry of Government and Justice.