French producers are up in arms following news that fiscallegislators are proposing changes to the tax credit system which came intoeffect in January of this year.

The tax credit, or credit d'impot, currently allowsproductions and co-productions, which qualify as French under French film board(CNC) guidelines, to write off between 10% and 20% of below the line costs suchas crew, art and set work, wardrobe, transportation and post-production. Theonly condition is that the work must be completed in France as a way to benefitlocal technicians and stem so-called'runaway production'.

The tax credit - essentially a deduction - has a cap ofEuros 500,000.

Now, however, the taxmen would like to amend the system.According to French daily Le Figaro, fiscal legislators are calling for allautomatic or non-reimbursable aid given to films to be separated out and thusnot calculated as part of the eligible deductible spend.

Automatic aide comes from a producer's compte de soutien, anaccount set up at the CNC based on a percentage of box-office, television andvideo sales of their previous films. Its use is discretionary with the onlystipulation that no more than 50% of the budget of a film can be covered viathis account. Should the legislation hold it would mark a blow to producers whooften rely heavily on their accounts as a way of funding projects.

Michel Gomez, director of the writers'-directors'-producers'association (ARP) said, "It is not normal that the rules should change in themiddle of the game. As usual it is the films with small budgets which willsuffer the most." Indeed, given the Euros 500,000 cap on deductions, largerproductions would be less likely to feel the pinch.

Calls to the finance ministry were unreturned.