The French government has approved a film tax credit scheme which was presented by prime minister Jean-Pierre Raffarin last week.

The total amount of credit available will be equal to 20% of all expenditure for work done in France. It will have a ceiling of Euros 500,000 for fiction and documentary films and Euros 750,000 for an animation.

In ratifying the proposal, France's budget minister Alain Lambert said the system would benefit, "tax-paying production companies on the condition that technicians working on a film be French or European and that film shoots and post production work be done in France."

The tax credit (or credit d'impot) aims to encourage films to shoot locally thus stemming so-called 'runaway production' and increasing business for France's post-production houses. Although a sale and leaseback scheme was originally thought to be ideal, France's culture minister Jean-Jacques Aillagon and the prime minister chose to push for the tax credit system which they consider more accessible to films of varying budgets.

The scheme should go into effect on January 1 of 2004.

A press release from Raffarin's office said the system would increase France's ability to compete on the international level and would ensure the "vitality of French production thanks to the maintenance and creation of thousands of jobs in the film sector."