Brazilian president Luiz Inacio Lula da Silva has sanctioned a law that creates a new fund for local films and makes adjustments to the country's existing Audiovisual Law.

The new law gives TV stations a tax break previously only available to foreign film distributors based in Brazil. The Audiovisual law now incorporates the mechanics of the Rouanet law, which expired at the end of 2006 and had allowed both individuals and corporations to sponsor cultural projects in return for tax breaks.

While previous audiovisual laws focused on foreign film distributors, now local TV stations and broadcasters will be given the possibility to co-produce films. TV companies will be able to invest part of their tax owed on foreign programming into local content. It's the same principle applied to foreign distributors based in the country, who are entitled to invest in local productions part of their due tax on money remittances to their headquarters overseas. This is an example of Brazil's notoriously strict regulatory measures placed on international product to protect local interests. The government also hopes the tax break for television companies will bring Brazilian TV and cinema sectors together.

The newly created local film fund, Fundo Setorial do Audiovisual, will finance local projects with resources that will mostly come from the country's film-industry-based Condecine tax (Contribution for the Development of the National Movie Industry). Created in 2001, this is a taxation placed on production, licensing, broadcasting and distribution of films in general (including Brazilian films). According to the government, the new fund will be able to generate R$42m ($19.6m) annually.

SCREEN QUOTA CHANGES

Meanwhile, Brazil's cinema sector has seen changes to its screen quota system. The Brazilian National Cinema Agency (Ancine), a branch of the Ministry of Culture, established lower quotas for theaters with one to four screens (which represents 85% of the cinemas in the country) and higher for complexes with nine screens or more.

Now a one-screen theatre is required to show Brazilian films for at least 28 days - as opposed to 35 days last year. A duplex must screen domestic movies for 70 days, down from 84 in 2006. Complexes with five to eight screens will keep the screen quota system from last year - 280 days for a five-screen theater, 378 days for a six-screener, 441 days for seven and 448 days for eight. For an 11-screen complex, the new quota is 506 days, up from 462 in 2006. How these quotas are spread across the screens is up to the exhibitor.

According to Ancine, the new system was established based on Brazilian film attendance in 2006, when admissions dropped an estimated 8% in relation to 2005.

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