Bill > HB364

This bill establishes a new Delaware Entertainment Production Tax Credit program to encourage investment in the state's film, television, esports, and videogame industries by offering tax credits for qualified production activities. The program defines "qualified activities" broadly to include the creation of various media projects and digital interactive entertainment, but excludes certain content like political advertising or obscene material. A "qualified company" is one primarily engaged in these activities and registered in Delaware, with restrictions for companies in tax default. "Qualified expenditures" are costs directly related to production within Delaware, covering a wide range of expenses from set construction to professional services, with specific rules for digital interactive entertainment as well. The bill allows a credit of 30% of qualified expenditures against various state taxes, requiring a minimum expenditure of $100,000 within a 12-month period. Unused credits can be transferred, sold, or carried forward for up to five years, and can be divided among partners in pass-through entities. To be eligible, companies must also provide internship opportunities for Delaware residents. The bill also includes provisions for withholding taxes from payments to "loan-out companies" (companies that provide personnel to productions), outlines administrative procedures managed by the Division of Small Business, establishes an appeals process, mandates audits of expenditures, requires reporting on the program's impact, and sets an annual cap of $10 million for credit awards, with priorities given to projects benefiting Delaware residents and businesses. The program has a sunset clause, with no new applications accepted after June 30, 2031, though previously approved projects can still receive final approval and claim credits. The act takes effect on July 1, 2026.