How Alaska's film-incentive program works

The way Alaska’s film subsidy works is often misunderstood. It is not simply a tax break for Hollywood producers.

Instead, the program calls upon the state government to pay 30 to 44 percent of the budget for all eligible productions filmed in Alaska.

Here’s how it works:

• Filmmakers who want to shoot a TV show or movie in the state apply to be pre-approved for the subsidy.

• After the production is finished, the producers submit an account of their Alaska spending, verified by an Alaska certified public accountant. Higher subsidies are awarded for hiring Alaskans, filming in the winter and shooting in remote locations.

• The state reviews the final application and, if approved, a subsidy is awarded. But rather than cut the filmmakers a check, the state provides the money in the form of transferrable tax credits.

• The filmmakers, who pay little or no taxes in Alaska, sell the credits at a discount to a company that owes corporate income tax to the state. The state does not reveal which companies buy the credits.

• At some point, the company that purchased the tax credits will cash them in. The state misses out on that corporate income tax and, indirectly, ends up paying for portion of the movie or TV show.

— Kyle Hopkins

Anchorage Daily News /