Russia Proposes Tax on Hollywood and Foreign Films

Profits from the biggest releases would be subject to a 20 percent tax.

Russia is revisiting the idea of taxing Hollywood and foreign films as Kremlin-loyal legislators have proposed a new initiative.

A draft law, aimed to protect the local film industry against competition from Hollywood and foreign films, stipulates a tax on net profits, ranging from 5 percent to 20 percent for movies released on at least 20 percent of all screens in the country. Films released on fewer than 20 percent of screens will be exempt.

Most major Hollywood releases fall into the 20 percent, heaviest-taxed category as they are released on at least 80 percent of all screens.

The bill will have to go through the Russian parliament's two chambers before it could be enacted, but since it was penned by Kremlin-loyal legislators, its chances of passing are high.

The proposal also means that the idea of introducing quotas for Hollywood and foreign films, which was seriously discussed just over a year ago, is unlikely to be revisited, at least anytime soon.

"Such steps were considered ineffective by the film industry as they would lead to worsening of movie theaters' financial state," reads an explanatory note for the new draft law, quoted by the Russian news agency RIA Novosti.

The draft law also stipulates that cash raised from the tax on Hollywood and foreign films should be spent on supporting the local film sector.

The idea of protecting local films at the box office at the expense of Hollywood and foreign fare was first floated in Russia several years ago as the government was looking for ways to increase the proportion of local films' box-office gross.

The government came close to imposing restrictions on Hollywood films in late 2014 when relations between Russia and the United States deteriorated over Ukraine, but the idea was rejected.