NORTH CAROLINA:
5/7/07:
NORTH CAROLINA now offers a refundable credit (paid directly by the state, after corporate tax returns have been filed) of 13.97% of all amounts spent in the state, for labor and services used in the state. The actual credit of 15% is subject to state corporate income tax of 6.9%, reducing the effective credit to 13.97%. Cast and crew need not be state residents, as long as state taxes are paid on their earnings. Note that insurance is not a qualified expense.

from  Axium Payroll Co.'s "Incentives Guide" - Download yours at http://tinyurl.com/z6kxj

New legislation provides that, as long as $250,000 is spent within the state, the
production company will be entitled to a refundable tax credit equal to 15% for all the
goods, services, and labor purchased in the state. Labor is capped at $1M for
individuals per production. The maximum credit per feature film is $7.5 million. The
production company must file a tax return at the end of its fiscal year. The
production company must first pay any state taxes that are owed; the state then issues
a rebate check for the full 15% rebate. Effective January 1, 2007, there will be no
add-back requirement.
The 7.0% sales and use tax on items purchased or rented for the making of films is
reduced to 1%. A certificate, available on the website, must be prepared and
presented to each vendor.
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There is a substantial crew and equipment base in North Carolina, with a number of
fully equipped sound stages available.

Selected Southern States Incentives Compared in an Informative Chart

 Incentive information

 Film office

Bill Arnold, Director
 North Carolina Film Office
 301 North Wilmington St.
 Raleigh, NC 27601
 Phone: 919-733-9900
 Fax: 919-715-0151
 Production Hotline: 800-232-9227
 Email: barnold@nccommerce.com

Incentives:
 Tax and Fee Incentives
 North Carolina offers fee-free use of state property and a 1% cap on sales and use tax. State sales tax for hotel room occupancy in excess of 90 consecutive days is refunded.

PRODUCTION / EMPLOYMENT CREDITS
As of August 13, 2005, production companies that spend at least $250,000 in North Carolina with respect to a motion picture or television production are eligible to receive tax credits up to 15% of in-state spending for goods, services, and labor.
Eligible film productions include theatrical, television, and direct-to-video/DVD features, episodic television series, television mini-series, animation productions, and commercials ó except for news, sporting event coverage, and political advertising.  For purposes of this tax credit, an episodic TV series is considered one production.
The maximum tax credit on a feature film production is $7.5 million.
Spending for goods purchased or leased from a North Carolina business is eligible for the tax credit. This includes fuel, food, airline tickets, and other goods if purchased in North Carolina. On goods with a purchase price of $25,000 or more, the amount included as a qualifying expense is the purchase price less the fair market value of the goods at the time the production is completed.
Spending for services is eligible for the tax credit regardless of whether paid to residents or non-residents, as long as the services are performed in North Carolina.   
Compensation and wages paid to employees for services performed in North Carolina on which withholding payments are remitted by the production company are eligible for the tax credit regardless of whether paid to residents or non-residents. Amounts paid to an individual who receives compensation in excess of $1,000,000 are excluded and are not eligible. Payments for per diem, living allowances, and fringe benefits are eligible to the extent they are included in the recipientís taxable wages subject to withholding.
 

Filming Development Account
 North Carolina is now offering grants through its Film Development Account. These grants are given to filmmakers who engage in production activities in-state with expenditures in-state of at least $1 million. The grant cannot be used for political or issue advertising and may not exceed 15% of the total spent in-state in one calendar year for goods and services. The grant will not exceed $200,000 per production.

All expenditure claims must be accompanied by a receipt or bill of sale and are subject to verification and approval by the NC Department of Commerce Finance Center, and reimbursements are subject to the availability of funds.

For more information about the Film Development Account, contact the North Carolina Film Office at either 310 246-0076 (Los Angeles), or 919 733-9900 (Raleigh, NC).
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"North Carolina made its name as a leading film and TV production center in the early '90s with its  experienced union crews at the low end of the IATSE pay scale, ample studio space (28 major soundstages)  and locales that could stand in for everywhere from Massachusetts (1990's "The Hunt for Red October") to the moon (1999's "Muppets From Space"). But without significant financial incentives on the books, the state watched its film and TV production revenue fall from a high of $504 million in 1993 to $230.8 million in '02. With the WB Network's "Dawson's Creek" going off the air, the symbolic and financial loss of the North Carolina-set epic "Cold Mountain" (2003) to Romania and a two-year drought in major studio features, the state was ready to go the extra mile to keep the fledgling WB series "One Tree Hill" from moving from EUE/Screen Gem Studios in Wilmington, N.C., (where the pilot was shot) to Vancouver, last  spring.

 "The solution was to provide them with a cash incentive," Wilmington regional film commission director  Johnny Griffin says. "I don't know of anything that compares to it. We actually did a three-way partnership  with the city, the county and the state, with the city and county each putting in $125,000 and the state  putting in $500,000, giving them a total of $750,000."

"Hill" producer Greg Prange is happy the series was able to stay in North Carolina, and not just because the  series is set there, and he owns a home in the area.
"It's a place where you have a built-in film crew base, a studio to work out of and you have good weather, a good climate, pretty beaches," the Los Angeles native says.

But even with all that North Carolina offers, there's no guarantee the production will stay in the state.
Adds Prange: "If we get a Season Two, I think the state is going to have to come up with some other kind of  incentive program to make it equitable for the studio."-  Hollywood Reporter 04/16/04
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Production Update Magazine  May 2005:

THE CAROLINAS
What You Need To Know About Lensing In The North and South
by Lily Gordon
For those of you who have ever visited North and South Carolina, or even just passed through, you know how truly beautiful that part of the country is. With the scent of magnolia and wisteria wafting through warm southern breezes; the serenading cicadas lulling you into a peaceful slumber; the brand new (and soon to be brand new) film incentives...who wouldn’t want to find a reason to film in the Carolinas?  It is picture perfect; perfect for pictures, really. From the sandy beaches and salty sea air of Hilton Head to the genteel hospitality and splendid homes of Charlestown, North and South Carolina are just bursting with breathtaking locations, both historical and modern. P3 recently spoke with film commissioners, producers and studio executives to give you the low-down on what it takes to produce your next film in the Carolinas.........................READ MORE

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