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Cambodia Filmmakers Face 'Taxing' Times

Crew on the set of "The Witch."
Crew on the set of "The Witch."

The launch of Angelina's Jolie's Khmer language feature "First They Killed My Father" promised to deliver a much needed shot of exposure and enthusiasm into the arm of Cambodia's emergent film industry.

Instead of using the spotlight to springboard their productions though, leading Cambodian filmmakers are fearing a proposed tax enforcement drive could kill the industry entirely.

Cambodia's Ministry of Culture called filmmakers to a meeting in October to discuss the planned imposition of taxes on filmmakers.

The clampdown echoes a broader push by the country's General Department of Taxation to transition from an opaque and dysfunctional system of negotiated tax to a more sustainable government revenue base.

But the idea an industry struggling to stay afloat can shoulder the implementation of full tax compliance is unrealistic, said Motion Picture Association of Cambodia president Chhay Bora.

Motion Picture Association of Cambodia President Chhay Bora.
Motion Picture Association of Cambodia President Chhay Bora.

"If the taxes are to be implemented [now],risk in the film industry will occur," he said. "I think not less than 80 percent of production houses will close down because it is a heavy burden to them.

"All the artists will lose their job," he added. 'The technical team will no longer be in the film industry. Perhaps it will be the same as what happened in the 2000s."

Cambodia's film industry experienced a brief resurgence in the early 2000s fuelled by surging nationalist tensions with Thailand but with little support or direction interest soon fell away.

About seven years into a second boom, filmmakers have now been informed of just under a dozen taxes they are obligated to pay from pre-production to screening that cover monthly production incomes, cast and crew salaries.

They are also in the firing line for taxes on equipment rental, studio rental, full time staff, revenue from screening, annual VAT and withholding tax.

Bora, the director of feature films 3.50, which delved into the deplorable world of the virginity trade, and Lost Loves, the story of a mother fighting for her family's survival under the Khmer Rouge, believes good cinema has a critical role to play in Cambodian society .

"It has influence in promoting culture, literature, and sending other educational messages," he said, adding the art-form also brings national prestige.

In recent years Cambodian films have garnered some notable attention on the world stage with features such as Davy Chou's Diamond Island and Rithy Panh's The Missing Picture gracing Cannes and the Oscars.

Their success has helped inspire a new generation of filmmakers and slowly the quality of productions is lifting.

International distribution remains extremely rare though, confining most Cambodian filmmakers to a handful of theaters across the country that screen films on average just 26 times — or for about two weeks.

Filmmakers and distributors have told VOA cinemas commonly take a cut of 55 percent from these limited ticket sales.

Rampant copyright violation has made web based sales effectively pointless with most filmmakers outright refusing to do it or exhausting every other possible alternative first before risking illegal downloads.

As a result the production of serious feature films is far from a lucrative enterprise with local Cambodian attempts rarely managing to break even. Instead the filmmakers work largely for exposure.

Salaries are low and work scarce forcing freelance crew members to rely on a few jobs a year while supplementing their incomes through menial jobs, such as driving Tuk Tuks.

Actor and director Huy Yaleng stars in his latest film, The Witch.
Actor and director Huy Yaleng stars in his latest film, The Witch.

Huy Yaleng, 38, rode the wave of the first cinema resurgence in the early nineties at the start of his career and felt the pain of having to turn to TV execs as cinemas shut their doors, reopening as pubs and restaurants.

"The industry has just recovered in the past few years, as we all can see that we are not strong enough to make profit yet," he said.

Huy said his latest thriller "Psychotic" had once again failed to turn a profit and vowed to throw in the towel if his upcoming feature "The Witch" brought no return again.

"I am worried. I have put my love into film for my entire life, and now it has problems," Huy said. "I haven't made any profit yet, but in my mind I told myself to continue because I love it and vow to serve this industry till the end. We will try until the end."

The proposal to apply 10 percent salary tax to crew members along with taxes on other subcontractors such as those providing transportation or catering is particularly onerous, Chhay said, because their inability to pay left the burden with the production house.

Worse, such taxes would be backdated to the time each production house registered itself — leaving filmmakers struggling to break even with huge retrospective tax bills.

So he is leading the push for a 10-year tax holiday for the entire industry.

Pok Bora, Acting Director of the Film and Cultural Diffusion Department, said that request had been forwarded to higher authorities in the government but no decision had been made.

"The immediate solution by the Ministry of Economy [and Finance], is to offer a tax break until the end of 2018 for the Withholding Tax on cinema screening," he said.

The government had also created a National Arts Support and Development Fund in June 2016 — only available to registered productions that fulfilled tax obligations.

"Therefore, there is a need to emphasize on tax reforms to make sure that the funds go to the right production," he said.

Chea Sopheap, executive director of the Bophana Audio Visual Resource Center, said solutions to the industry's financial woes hinged on research and clear understanding.

"So the best way is to have a good discussion, good study in order to find a balance between cinemas, film productions and the government," he said.