Fundo de Financiamento da Indústria Cinematográfica Nacional
FUNCINEs are one of the most effective audiovisual financing mechanisms in Brazil. Established through Provisional Measure No. 2.228-1, on September 6th, 2001, and later improved by Law No. 11.437, on December 29 th , 2006, the funds are regulated by CVM (Securities and Exchange Comission) Rule No. 398 as well as by ANCINE Rule No. 80. Organized as closed-ended condominia, with no legal personality, and administered by financial institutions authorized by Brazil’s Central Bank, FUNCINEs’ activities are subject to continued scrutiny by CVM.
Individuals can deduct up to 3% from their income tax due, whereas legal entities are able to deduct up to 6% from their income tax due in order to invest in FUNCINEs. The incentive mechanism is designed to invest in the production and distribution of movies and TV programs, in the construction and remodeling of movie theaters and in the acquisition of companies’ shares within the audiovisual sector.
Shareholders will have financial and marketing returns from movies invested through FUNCINEs, in addition to a transparent management of resources.
Despite being similar to other tax incentives set forth in Law No. 8.685, also known as Lei do Audiovisual, or in Law No. 8.313 – Lei Rouanet –, FUNCINEs are set apart by two aspects: the first one is the grant of both marketing and financial returns; the second is the fact that it does not impact EBITDA, since it is an investment rather than a sponsorship. Deductions through Lei Rouanet, in turn, are accounted as expenditure.
FUNCINEs are inspired by Soficas (Societes pour le Financement du Cinema e l’Audiovisuel), and have as goal the development of the sector in an innovative way.