Russia Downplays Quota Proposal for Hollywood Imports, Mulls Tariffs Instead

Russian Minister of Culture, Vladimir Medinsky.

The country's culture minister says tax incentives to support local movies and higher tariffs on some foreign films is a better strategy for diminishing Hollywood's dominance of the local box office.

Russia's minister of culture threw a lifeline Monday to Hollywood studios fearing the introduction of movie import quotas in the country, which could harm U.S. interests at the Russian box office.

Vladimir Medinsky told a Kremlin cabinet meeting that tax incentives and other measures should be used to support Russian movies, but he ruled out the implementation of quotas.

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Last month Russian lawmaker Robert Shlegel proposed a bill to guarantee that half of all films shown in the country were locally produced. That would have restricted the market for foreign films and damaged Hollywood business in the country, which last year accounted for $860 million of the Russian total box office.

Instead, he said tax incentives for local producers and higher import tariffs for some foreign movies should be used to help increase the share of Russian movies at the local box office, which has dipped from more than 30 percent a few years ago to less than 15 percent last year.

His comments, during a cabinet meeting headed by prime minister Dmitry Medvedev, are likely to allay fears that Russia is headed toward a Chinese-style approach to limiting the number of western movies screened in the country.

Medinsky said he prefers to find ways to support Russian domestic production through grants and tax exemptions for P&A on local movies.

But in remarks that alarmed distributors of international arthouse fare in Russia, he said that officials should look at increasing import tariffs on "foreign films of low commercial appeal."

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That could mean Russian audiences missing out on the works of directors such as Lars von Trier, the Dardenne brothers and other names popular with niche, but significant, audiences in the country.

"They want to make advertising expenses for local films VAT-free," said Sam Klebanov, founder of Moscow arthouse distributors Cinema Without Frontiers.

"This is quite logical, as virtually all production services for local films are VAT-free too," he said. "On the contrary, creating customs fees for films with 'limited commercial potential' is the most absurd, illogical and incompetent idea in a long time."

He added: "Imposing extra customs duties will exterminate independent and arthouse distribution in Russia and create a cultural landscape populated by only local films and Hollywood tentpole movies. Nothing else."

Medinsky says that he, the Ministry of Finance and other official agencies, including the fund for the social and economic support of national film, will draw up recommendations by the end of June on a range of measures to support national cinema.

His remarks were included in minutes of the meeting that were posted on an official Russian government website Monday.