Russia Drops Proposal for Tax on Hollywood, Foreign Films Amid Opposition From Exhibitors

MOSCOW, RUSSIA-Red Square-Getty-H 2016
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Movie theater operators argued that an extra tax could harm the industry.

An initiative aimed at taxing Hollywood and foreign films in Russia in a bid to raise more funding for homegrown movies has failed amid opposition from exhibitors.

"The [film exhibition] sector said no, and the government had to agree with that," a source in the culture ministry, which has come up with several proposals aimed at restricting Hollywood and foreign films in Russia, was quoted as saying by news agency Interfax.

In accordance with the original proposal, a tax on net profits, ranging from 5 to 20 percent for Hollywood and foreign movies released on at least 20 percent of all screens in the country, was to be introduced.

A later version of the proposal stipulated a flat 3 ruble (5 cents) tax on all tickets for non-local films. The proceeds from the tax would have been used to help fund homegrown movies, on top of the 3 billion rubles ($48 million) annually disbursed by the government via the cinema fund and the culture ministry.

However, Russian exhibitors opposed any extra tax, complaining that against the backdrop of an overall economic downturn, theaters are barely surviving and could not carry any more tax burden.

The tax proposal came on the heels of other Russian initiatives aimed at protecting the local film industry at the expense of Hollywood and foreign films, but none of them has properly worked out.