Russia Plans Tax Cut for Local Animation Industry

Moscow Russia Aerial View - H 2013
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Moscow Russia Aerial View - H 2013

The measure aims to boost the local animation sector, which has done well recently.

The Russian government has proposed tax privileges for the local animation industry to help it compete with Hollywood and foreign animators.

Under a proposal penned by the country's economic development ministry, Russian companies that produce animated films will get the same privileged tax treatment as companies located at a government project outside of Moscow, the innovation center Skolkovo, regardless of their location.

The privilege will apply to taxes on salaries, which will make a major difference for the segment as personnel costs in the Russian animation industry account for 80 percent of all expenses.

Under the proposed regulation, the taxes that animation companies pay on salaries would be reduced from 30 percent to 14 percent.

The voting date on the proposal has not been announced yet, but it is likely to be this fall as 2016 is "the year of cinema" in Russia and the government is eager to take steps that support the industry.

The idea of tax privileges for the local animation industry was first discussed earlier this year at a government meeting devoted to the movie sector and has received preliminary approval from prime minister Dmitry Medvedev.

Over the last few years, Russian animated films, such as the franchises Snow Queen, Kikoriki and Masha and the Bear, have done well globally, generating more interest from foreign buyers than Russian live-action movies.

Recently, Russia has made several moves to protect the local film industry via tax measures. Earlier this year, a bill slapping a tax on foreign digital companies, such as Google, Netflix and Apple, was penned and is awaiting final approval. More recently, a tax on Hollywood and foreign films was proposed.