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Feature Note / Alessandri Abogados Newsletter, Legal Publications

Opening act bill revives discussion on national performers in massive concerts

SCD , Telonero Law
26 June, 2019
  • Among other aspects, the bill obliges producers of massive musical events of more than 3,000 attendees to have a national artist as backdrop and increases the requirements for access to VAT exemption.
  • Regulating a sector linked to culture could harm precisely those who are targeted, making the final price of concert tickets more expensive and making negotiations between producers and artists more difficult.

In January 2019, legislative discussion resumed on the bill amending Law No. 19,928 on the promotion of Chilean music, known as the opening act Law. The bill (Bulletin 6110-24), in the second constitutional procedure, was approved in general on May 7 and is currently in the period of indications in the Education and Culture Commission in the Senate.

A number of implications can be seen in the current state of the project, the main one being tax: by requiring the presence of a national artist or performer as the backdrop, the requirements for exemption from the payment of Value Added Tax (VAT) would be increased. This is because the VAT law contemplates certain cultural acts and the music industry is based on a series of goods and services exempt from the tax.

Additionally, in order to have the tax advantage mentioned above, the project considers the obligation of event producers to have the sponsorship of the embassy or consulate of the foreign artist’s nationality or to prove that their show is part of an exchange or extension program of that State.

Within the proposed legislative adjustments is the limitation of the amount of tickets that can be sold in pre-sale format, corresponding to 50% of the available seats. The Chilean Society of Authors and Musical Performers (SCD) has stated that “this change has no effect from the point of view of the payment of royalties, the amount of which is independent of the number of songs performed, and of the nationality or origin of the authors of such songs or of the artists on the stage.

Although the bill is aimed at the policies proposed by the current Ministry of Cultures, Arts and Heritage and talks in harmony with the regulations of other countries on the matter, it does not take charge of resolving other aspects, such as what would happen when the conditions of the show or the contracts prevented the presence of a national artist as backdrop.

The Asociación Gremial de Empresas Productoras de Entretenimiento y Cultura (AGEPEC) has questioned the fact that the bill would be establishing higher entry barriers by having more regulations for the development of the entertainment industry. This would imply a critical point of the project, since there are international artists who, by contract, demand that their shows have no other preamble to their own music.

We hope with attention the next steps that this project will have in the Senate since regulating a sector linked to culture could bring the opposite effect and harm precisely those who are targeted, raising the final price of concert tickets and hindering negotiations between producers and artists.

Jaime Urzúa
Associate
Alessandri

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