The Irish Minister for Arts, Sport and Tourism, John O'Donoghue, has issued a stern warning to producers about abusing the film industry's Section 481 tax break.

Speaking at the launch of the Irish Film Board's Annual Review, O'Donoghue said: "No-one is suggesting that the majority, or anything close to it, of producers have abused the system, but there has clearly been some sharp practice by a small number. To that small number who do not play by the rules I say: - perhaps you should really consider another line of work, because we will make things so hot for you that it will not be worth your while to stay in the business, and it is likely to cost you dear if you continue."

Continuing the uncharacteristically forthright tone he said, "This may sound like a harsh line, but the reality is that a small number of abusers could very easily destroy the entire Irish film sector. This industry is just too important culturally and economically for this to be allowed to happen, and I will not readily accept it."

A month ago the Irish tax authorities, the Revenue Commissioners, told a parliamentary committee that they had identified Euros 20.3m of tax relief which had been invested in projects which were not, they asserted, in compliance with the operating terms for the incentive.

The Minister pointed to the publication of the PricewaterhouseCoopers report (, Dec 12) and said his Department was working with the Department of Finance and the Revenue Commissioners to identify "adjustments to the administration of the scheme that would best address the abuse issue."

The PWC report proposes the implementation of three measures to ensure that a producer, who intends to push the limits of the level of Section 481 funds to be raised for a film, would do so in the knowledge that: (a) an expert with a detailed knowledge of the film industry is reviewing the budget; (b) the producer himself would need to sign a statutory declaration that the certified Irish spend has been met; and (c) an audit of the invoices will be undertaken for approximately 1 in 10 of the films made in Ireland that year.