Corporate > AG Deal Diary > Russian Box Office: Proposal to Tax Hollywood Films
03 May '16

Death and Russian Taxes

The Russian government has found another way to make 2016 “The Year of Cinema.” Rather than increasing direct support for films, Russian legislators may impose a tax on foreign films. The proposed law would apply a 5-20 percent tax on net profits on any foreign film released on at least 20 percent of all Russian screens. Most Hollywood films fit this threshold and would face the 20 percent tax burden. The money collected from this tax would go toward supporting Russia’s domestic film industry.

The History of Russia’s Relationship with Hollywood Releases

In 2014, Russia started discussing the possibility of placing restrictions on Hollywood and other foreign films. These restrictions were opposed by the Russian film industry, many of its prominent members arguing that Russian films could stand on their own without the aid of these types of protectionist laws. The discussions did not result in the passage of any legislation, but they planted the seed for later discussions.

In early 2015, Russia gave its Ministry of Culture the power to control the release dates of foreign films. This added power, however, did not offer as much relief as the Ministry had hoped, with foreign films still outperforming Russian films at the box office.

Status of the Law

The events and Russia’s declining performance at the box office have set the stage for the proposed tax. The bill is currently under discussion, but the political support behind the bill suggests that it has a good chance of becoming law.