The largest film distribution network made a desperate attempt to convince the Russian authorities to abandon the introduction of VAT on foreign cinema

They appealed to President Vladimir[t:tag slug=vladimir]Vladimirt:tag] to intervene. The introduction of the tax will not only lead to the mass closure of cinemas and exit of the big players, but also have a negative impact on the social sphere, film distributors believe.

At the disposal of “b” was a letter theatrical community of national institutions “Burning Land” to Vladimir Putin about the government’s plans to introduce VAT on cinema tickets. It could kill the industry, the authors believe (the letter signed by owners and managers of the nine largest film distribution networks, including “Karo Film”, “Formula Kino”, “Cinema Park”), recalling that the distributors of foreign films are already paying VAT they rolled to the Russian budget. The introduction of VAT on tickets for Hollywood filmmakers revenues will not be affected, but a blow to the economy of Russian cinema, and in Russia, and so are sold every year only 1.2 tickets per inhabitant is much lower than in other developed countries.

Booker emphasize that since 2009, theater owners have incurred huge costs due to complete the transition to digital services, and in 2014 “were shocked” by the devaluation of the ruble, as the vast majority of leases recorded in the currency, and now the network “on the brink of profitability “. The prices for the tickets are not growing - “movie was available to the general public, including the poor” Introduction of VAT will force the industry or raise prices or close unprofitable theaters.

The idea to introduce a tax from the sale of cinema tickets unveiled in June, Prime Minister Dmitry Medvedev at a meeting with filmmakers in Gorki. “We should not give incentives to foreign products”, - said the prime minister, noting that the change in the tax system could lead to an additional source of funds for domestic cinema (see. “Kommersant” on 23 June). He instructed the Ministry of Culture and the Ministry of Economy to consider the possibility of levying VAT on ticket sales in the cinemas during the demonstration of foreign films. The head of the Ministry of Culture Vladimir Medina promised to run an errand for a month (see. “Kommersant” on June 29).

Charges Russian cinemas in 2014 totaled 46 billion rubles. Of this amount, 82%, or 38 billion rubles., Fell on foreign films. If theaters had to pay a 18% VAT which they would have spent on it about 6.84 billion rubles. “We do not have your own product to occupy a substantial portion of screen time. Now it is less than 20%, and in 2016 will be even worse due to the reduction of state film production”, - says the president “Burning Land” and the head of “Lenfilm” Eduard Pichugin. Russian cinema is demonstrated mainly in Russia, that is, the collection of such films are directly dependent on the state and development of domestic theaters, he said. “Large networks will sustain the introduction of VAT, they have only to EBITDA will fall by 12-15%, but the main impact will odnozalnye on cinemas, which are not included in the network and are at the break-even point”, - said Mr. Pichugin.

9 July 2015

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