New Zealand Prime Minister John Key made it official late last night that Peter Jackson's The Hobbit and The Hobbit Sequel have been cleared to shoot in New Zealand.

The New Zealand government was said to have provided up to $25 million in incentives, including $15 million in tax credits and $10 million in marketing costs that the government will offset. The estimated budget for both movies is said to be as high as $500 million. It was also said that New Zealand will play host to at least one of the two prequels' world premieres as well.

The New Zealand government will introduce legislation that will make a clearer distinction between independent contractors and employees in the film industry. Here's what John Key had to say on the matter:

"The industrial issues that have arisen in the past several weeks have highlighted a significant set of concerns for the way in which the international film industry operates. We will be moving to ensure that New Zealand law in this area is settled to give film producers like Warner Bros the confidence they need to produce their movies in this country. This will guarantee the movies are made in New Zealand. I am delighted we have achieved this result. Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of The Lord of the Rings trilogy in once again promoting New Zealand on the world stage. It's good to have the uncertainty over, and to have everyone now full steam ahead on this project."

Peter Jackson will direct both movies and principal photography is slated to begin in February.