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Russia mulls taxes, quotas to protect local film

Parliament will rule on measures

MOSCOW — Russia’s ruling party is set to tax screenings of foreign movies and introduce exhibition quotas for locally-made films to help the country’s domestic industry.

United Russia, which is loyal to President Vladimir Putin and dominates the lower and upper houses of parliament, wants at least one in every five movies shown to be homegrown.

The party also wants to lift value added tax (VAT) exemption from foreign films — adding 18% to exhib and distrib costs — and impose fines of between $3,000 and $12,000 for non-compliance.

Currently all films screened in Russia are VAT exempt under cultural and artistic rules.

A bill, proposed by Sergei Zheleznyak, a United Russia member and deputy speaker for the Duma, Russia’s lower house of parliament, is due to be discussed by lawmakers in the new parliamentary session reconvening Jan. 13.

The move has been prompted by the weakness of homegrown films, where market share of the annual box office take has dropped from 25% five years ago to less than 13% of the $1.1 billion 2012 take.

Top grossing film last year was “Ice Age: Continental Drift” with just over $50 million in box office receipts. Top grossing Russian film was “Ivan Tsarevich and the Gray Wolf” with $20 million.

Taxpayer support for local films has doubled to more than $170 million a year over the past three years but few make money at the box office.

In late November, culture minister Vladimir Medinsky took control of government funding for films, the lion’s share of which had been channelled through the Russian Cinema Fund, a government agency not directly under his ministry’s control.

Medinsky has not specifically advocated quotas but is known to strongly support any measures that will encourage larger audiences for domestic films and is understood to have liaised with Zheleznyak on the bill.

But industry professionals in Moscow say quotas are unlikely to work.

Sam Klebanov, founder of Cinemas Without Frontiers, Russia’s leading boutique distributor of foreign language art-house films, told Variety the measures would damage exhibs and indie cinema.

“Distributors already pay VAT so the measures would hit cinemas, that currently do not. The foreign majors would find ways of ensuring that their films got full play meaning that the measures would hit indie films hardest,” Klebanov said.

The vast majority of cinema chains in Russia had been developed by private owners, Klebanov said, adding that he did not see why the government should dictate what they screened.

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