Russia Proposes Tax on Hollywood and Foreign Films

Vladimir Medinsky Russian Culture Minister

The government expects to collect $25.5 million a year from a 3 percent tax.

The Russian government has proposed slapping a 3 percent tax on all Hollywood and foreign theatrical releases instead of hiking the exhibition license fee, an earlier idea that was widely criticized by local distributors.

Culture minister Vladimir Medinsky, known to be keen to protect homegrown movies against Hollywood competition, announced the initiative at a government meeting devoted to the film industry on Tuesday.

The proposal is to be considered and voted on in early 2018 and its chances of going into law are high as the culture ministry has long been looking for a way to tax foreign releases.

The idea of taxing foreign movies signifies backing down from the previous, more radical proposal to hike the exhibition license fee for all theatrical releases. The fee, which is mandatory for a theatrical release in Russia, was set to skyrocket from 3,500 rubles ($60) to 5 million rubles ($85,000), and producers of local movies would be later reimbursed for the entire amount.

Distributors of foreign indie fare criticized the idea, arguing that the exhibition license fee would kill the entire segment, making the lion's share of indie releases loss-making by default.

Now the government came up with what it believes to be a fair deal that puts all distributors of foreign movies in the same situation, while proceeds from the tax, estimated to be at least 1.5 billion rubles ($25.5 million) a year, will be distributed among local filmmakers as extra funding.

The local offices of Sony, Disney and Fox did not reply to The Hollywood Reporter's request for comment. Major local distributor Karo, which distributes Warner Bros. movies, declined to comment.