Russian Production and Studio Tax Incentives Could Get Government Greenlight, Say Studio Chiefs

Lobby for tax incentives hoping for Kremlin measures later this year.

MOSCOW -- Moves by Russian studio chiefs to pressure the Kremlin to adopt production tax incentives in line with many European countries might soon bear fruit.

Talks between heads of studios and government officials from tax, economic development and finance ministries are looking positive, according to Ilya Bachurin, Glavkino’s CEO.

The $100 million studio has plans for a second-phase development of a further $100 million as demand develops.

Glavkino, which is owned by investors that include leading film and television figures such as producerdirector Fedor Bondarchuk and Channel One head Konstantin Ernst, has been leading a campaign for tax incentives.

Studio chiefs argue that tax incentives of around 20 percent that have been adopted across many central and Eastern European countries mean Russia will be left behind unless it levels the playing field.

Hungary, the Czech Republic, Croatia -- and most recently Lithuania -- have all adopted tax incentives to help bring in international productions along with many other European countries.

“After talks with top officials, we agreed that rather than publish open letters calling for these measures to be introduced, it was better to work with the ministries,” Bachurin tells The Hollywood Reporter.

Russian president Vladimir Putin pays close attention to the film industry and recently criticized corruption in the distribution and spending of subsidies.

Officials from key ministries have told studio chiefs that by working together on a raft of measures, they are likely to have a greater chance of achieving the incentives for which they are fighting.

“We are expecting a raft of measures that meet many of our objectives to be announced after the summer -- in the autumn,” Bachurin added.

Measures are needed, he added, to help improve the use of studio facilities by productions with bigger spends than most local films.

Glavkino, which has a total area of 33,000 square meters with 9,000 square meters of 12 stages, wants to attract bigger productions. Currently as many as “90-95 percent” of Russian productions have budgets of less than $2 million, he said.

The studios have a number of features in production or in post, including Bondarchuk’s $30 million World War Two epic Stalingrad, where Glavkino is providing post services. The film is due for release Oct. 10 and is Russia’s first-ever IMAX 3D production.

A trailer for the film, shown Wednesday to journalists and industry figures -- with lines like “six brothers in arms protecting the heart of their homeland” and “in war there is love and in love there is hope” -- reflect the blockbuster ambitions of the special FX-laden war film.