Extinction of Public Trusts Related to Culture in Mexico

October 2, 2020

On September 8, 2020, the Ministry of Finance and Public Credit (SHCP) presented a draft fiscal package, which includes a cut of approximately 25% to the budget of the Ministry of Culture.

On September 19, 2020, Arturo Herrera Gutiérrez, Secretary of Finance and Public Credit (SHCP), commented in social networks that he was working with the Ministry of Culture to strengthen the Mexican Institute of Cinematography (IMCINE). They are studying the scheme of the stimulus called Efiartes to ensure that the highest quality projects, and not the projects that come with a promoter, are the beneficiaries of a stimulus.

Efiartes is a fiscal stimulus of the SHCP for investment projects in national theater production, editing and publishing of national literary works, visual arts, dance, music in orchestral conducting, and instrumental and vocal performances of concert music and jazz. Efiartes is a benefit that will be granted to further the creation and production of the various arts by means of a tax credit for the amount contributed by a taxpayer of Income Tax (ISR) to an investment project.

Efiartes allows individuals to contribute resources to an investment project and reduce the amount of their income tax payment caused during the year. The amount of the contribution to the corresponding investment project (for which a credit in the payment of the ISR will be authorized) cannot be higher than 2 million pesos per contributor and investment project, nor than 10% of the ISR of the contributor in the immediately preceding year.

The Committee on Budget and Public Account of the Chamber of Deputies approved the extension of the initiative to extinguish 109 funds or trusts in accordance with the budget cut to IMCINE, Culture, Film, Arts, among others in the 2021 fiscal package.

The Secretary of Culture through IMCINE issued a statement on September 29, 2020, through which it was made known to the public that:

1. The funds managed by IMCINE through trusts (Fidecine and Foprocine) were an effective tool for the support and growth of Mexican cinema, giving the authority that they will be extinguished.
2. That support for Mexican cinema will continue directly through IMCINE, as a budgetary program of subsidies will be implemented, subject to operating rules, and that it will be through citizen councils that all projects will be evaluated in all calls, and that there will be eleven annual calls, grouped into three categories:

• Eight (8) differentiated calls to support the production and post-production of feature films and short films
• Two (2) calls for support for the exhibition: spaces and projects for the formation of audiences and the exhibition of Mexican cinema.
• One (1) call to support the creation and preservation of film and audiovisual archives.

3. EFICINE (fiscal stimulus), will continue with its two annual open calls for production and distribution.
4. The authority will continue with grants for scriptwriting, story lines and project development, with training and production programs for filmmakers and indigenous and afro-descendant communities, with short workshops and long term community training projects, with the promotion of Mexican cinema and through its national and international dissemination programs, among other support.
5. That the operational capacities of IMCINE will be strengthened while providing greater certainty about the budget allocated annually to support national cinema.
6. That there is joint work between the Ministry of Culture and the Ministry of Finance and Public Credit, through which a commitment has been established to make the transition between the administration of a trust and the operation of a budgetary program efficient and transparent.

Olivares believes that the purpose of María Novarro, director of IMCINE is to present her proposal for possible modifications to the Federal Law of Cinematography for the strengthening and adaptation of Fidecine, and the integration of a new fund that could be called the Integral Fund for Mexican Cinema (Focine).

The Federal Law of Cinematography would need to be amended to broaden and strengthen IMCINE’s faculties, as well as to reallocate the resources resulting from the extinction of the trusts, for the proper operation of Focine.

If EFICINE is the only trust left, it will be SHCP who will decide on the remaining support (incentives) related to the production and exhibition of films. Therefore, the faculties granted to IMCINE by granting it technical and operational autonomy become even more relevant.

Currently, there is no clarity on the destination of the resources that are intended to be collected with the extinction of the 109 trusts mentioned, nor on the support to the affected sectors among which cinema, culture, arts and sports stand out.

We will continue to actively monitor the situation and are available for any questions or assistance that may be required from our partner Luis C. Schmidt and his team, who will be happy to answer any questions.