§ 15-4-2003 - Definitions.
15-4-2003. Definitions.
As used in this subchapter:
(1) (A) "Below-the-line employees" means employees involved with the production of a motion picture production, including without limitation:
(i) Casting assistants;
(ii) Costume design;
(iii) Gaffers;
(iv) Grips;
(v) Location managers;
(vi) Production assistants;
(vii) Set construction staff; and
(viii) Set design staff.
(B) "Below-the-line employees" does not include actors, directors, producers, and writers;
(2) (A) "Film and digital product" means video images or other visual media entertainment content.
(B) "Film and digital product" includes without limitation:
(i) Motion pictures;
(ii) Documentaries;
(iii) Long-form programs, specials, miniseries, series, music videos, and television programming;
(iv) Interactive television;
(v) Interactive games;
(vi) Video games;
(vii) Commercials;
(viii) Digital media created primarily for distribution or exhibition to the general public; and
(ix) A trailer, pilot, video teaser, or demo created primarily to stimulate the sale, marketing, promotion, or exploitation of future investment in either a product or a qualified production through any means and media in a digital media format, film, or videotape if the program meets all the underlying criteria of a qualified production;
(3) "Film office" means the division of the Arkansas Economic Development Council charged with the responsibility of promoting and assisting the digital content industry in Arkansas;
(4) "Financial institution" means any bank or savings and loan association in the state that carries Federal Deposit Insurance Corporation insurance;
(5) (A) "Highly compensated individual" means an individual who directly or indirectly receives compensation in excess of five hundred thousand dollars ($500,000) for personal services with respect to a single production.
(B) An individual receives compensation indirectly when a production company pays a personal service company or an employee-leasing company that pays the individual;
(6) (A) "Postproduction" means a final stage in the production of digital content occurring after the action has been filmed or videotaped and involves editing and the addition of soundtracks.
(B) "Postproduction" includes without limitation editing, music, soundtracks, special effects, and credits;
(7) "Postproduction costs" means all expenditures incurred in the state in the postproduction phase of a state-certified production;
(8) (A) "Production" means the process of producing a type of entertainment content and includes film and digital product.
(B) "Production" shall not include:
(i) An ongoing program created primarily as news, weather, or financial market reports;
(ii) A production containing any material or performance that is obscene;
(iii) A production deemed an infomercial; or
(iv) Sexually explicit productions as defined in 18 U.S.C. 2257, as it existed on January 1, 2009;
(9) "Production company" means a corporation, partnership, limited liability company, or other business entity engaged in the business of producing qualified productions and qualified by the Secretary of State to engage in business in the state;
(10) (A) "Qualified production costs" means costs incurred in Arkansas in the development, preproduction, production, or postproduction of a qualified production.
(B) "Qualified production costs" includes costs incurred concerning original music compositions produced by an Arkansas resident to be used as incidental music, the score, or the soundtrack in film or video games.
(C) "Qualified production costs" includes the cost to option or purchase intellectual property, including without limitation books, scripts, music, or trademarks relating to the development or purchase of a script, screenplay, or format if:
(i) The intellectual property was produced primarily in Arkansas or the creator of the intellectual property is a resident of Arkansas;
(ii) At least seventy-five percent (75%) of the subsequent film or digital content is produced in Arkansas; and
(iii) The production expenses or costs for the optioning or purchase are less than twenty-five percent (25%) of the production expenses or costs incurred in Arkansas. The expenses or costs include all expenditures associated with the optioning or purchase of intellectual property, including option money, agent fees, and attorney's fees relating to the transaction but do not include deferrals, deferments, royalties, profit participation, or recourse or nonrecourse loans that the eligible production company may negotiate in order to obtain the rights to the intellectual property.
(D) "Qualified production costs" does not include:
(i) The optioning or purchase of intellectual property that does not comply with the provisions of subdivision (8)(A) of this section;
(ii) Media buys, promotional events, or gifts or public relations associated with the promotion or marketing of any qualified production;
(iii) Deferred, leveraged, or profit participation costs relating to any and all personnel associated with any and all aspects of the production, including, but not limited to, producer fees, director fees, talent fees, and writer fees;
(iv) Amounts paid to persons or businesses as a result of their participation in profits from the exploitation of the qualified production; and
(v) Salaries for highly compensated individuals;
(11) "Resident" means natural persons and includes, for the purpose of determining eligibility for the rebate incentive provided by this subchapter, a person domiciled in Arkansas and any other person who maintains a permanent residence within the state and spends in the aggregate at least six (6) months of the taxable year within the state; and
(12) "State-certified production" means a qualified production produced by an eligible production company that is:
(A) In compliance with established regulations to this subchapter;
(B) Authorized by the commission to conduct business in this state; and
(C) Approved by the commission as qualifying for a production rebate under this section.