The Italian government has presented a draft law to Parliament proposing a number of dramatic changes to the country's entertainment laws, including the introduction of a tax shelter.

The draft law proposes that public funding for Italian movies should be capped at 50% of the budget. The current state funding system, the Fondo di Garanzia, has frequently come under fire for providing the majority of the budget of individual pictures, meaning producers are not motivated to recoup production costs.

The law also proposes that ten debut features must be financed by the state every year. In addition, the state's fund for entertainment, which also covers dance, theatre and opera, will have to ensure that at least 25% of its total budget is used to fund the local cinema industry.

The current Film Commission, which has often been criticised for funding films that are commercially unprofitable, will be replaced by the "Institute for the Development of Cinema". Its board will comprised a general director and a 15-member committee, who will be elected for a non-renewable 2-year period.

Finally, the draft law proposes the introduction of a tax shelter for both media and non-media related companies who will be able to invest in the production and distribution of films using up to 30% of their declared profits and deduct them from their taxable revenue.

Italian exhibitors who agree to programme a 40% quota of Italian and European movies will also be able to benefit from the tax shelter.