Russia Proposes New Tax on Hollywood Movie Ticket Sales

Russia Foreign Ministry Building Moscow - H - 2015
Associated Press

An 18 percent price hike would affect only U.S. and foreign fare, says Russian prime minister Dmitry Medvedev.

Russian prime minister Dmitry Medvedev has proposed a value added tax of 18 percent on the sales of cinema tickets for Hollywood and foreign movies only.

The controversial move — mooted before by nationalist deputies who see it as a response to U.S. and European sanctions imposed over Russia's seizure last year of Ukraine's Crimea peninsula — would bring in about $190 million a year. Russia's culture minister, Vladimir Medinsky, has previously said he is against such a tax.

Last year Russian box office totaled around $1.25 billion, of which just over $1 billion came from ticket sales for foreign, mostly Hollywood movies.

Medvedev's comments — the first by such a senior member of President Vladimir Putin's administration — would force up the price of an average ticket by almost $2. If introduced, the move would have an immediate impact on ordinary Russians, as well as exhibitors.

Many Russians are currently suffering against a background of economic recession, job insecurity and rising prices of basic foodstuffs and services as international sanctions against the country begin to bite.

"We need to look at the tax system, including tickets," Medvedev said during a meeting with the producers and team behind war film Battle for Sevastopol, an example of a successful Russian film that did well at the box office at home and recently sold to China.

Some taxes and tax breaks could remain in the current economic situation, but others should be changed, he said.

"If this happens, then maybe some of the money may be spent on the development of national cinema," Medvedev was quoted as saying by state news agency TASS.

Cinema tickets are currently VAT-free, a measure designed to help support Russia's cinemas by keeping costs of going to the movies down.

Medvedev's proposal was immediately criticized by the Cinema Alliance, an industry body for exhibitors in Russia.

The organization said that any rise in ticket prices would hurt not only exhibition, but production ticket receipts were the backbone of the film industry.

The alliance said the best way to increase distribution in Russia was to build more cinemas. Noting that cinemas existed in 526 cities in Russia, with a total of 3,800 screens, the body said, "50 million people in our country do not have access to cinema."