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Russian ministry of culture has proposed amendments to cinematographic law aiming to bite Hollywood

Russian ministry of culture (MinCult) has proposed amendments to the Russian law on “State support of Russian cinematography”. These amendments reflect the idea to protect Russian cinema market from Hollywood’s “occupation” and to provide more opportunities in internal Russian marketplace for movies produced in Russia.

According to these amendments, the person, who received permission to show movie in cinemas, is obliged to make a payment of non-tax nature to special monetary fund, created to support the development of cinematography. The amount of payment is five million Roubles. The payment is to be made within 30 calendar days following the day when total quantity of displays of movie in cinemas exceeds 100 times. The person, who made non-tax payment, within 7 calendar days must notify the relevant federal executive authority thereof, the person must provide the authority with document confirming the payment.

Failure to make a payment or to make a payment in full give rise to the cause to cancel permission to display movie in cinemas or even to distribute movie in certain way in Russia. If the person makes a payment after the permission was cancelled, such person has the right to apply for such permission again. In this case the payment is not to be paid twice. If the person, who already has received permission, did not make a payment, such person can be refused next time when the person will apply for permission for other its movie.

What about a special monetary fund, created to support the development of cinematography? This fund is intended to support production and distribution of national (Russian) movies. Support consists of financial guarantee for and/or reimbursement of costs linked to production and displaying of national movies. The Russian government should regulate how to spend accumulated monetary fund. It is also forbidden to spend the money from the fund on purposes other than stated above. Non-tax payments are the source of this special fund.

Russian government is incorporator of non-for-profit organization which will be responsible for forming of special fund. The main purpose of such organization is support of Russian cinematography and creation of conditions for production of qualitative national movies and popularization of national films in Russia. The draft law does not specify whether such organization must be created in future, or it already can exist.

The organization must have supervisory board. Among the members of this board must be also representatives from relevant federal executive authority and payers of non-taxable payment. The quantity of members, who is on board, must be approved by relevant federal executive authority. The members of board execute their duties gratuitously.

Each week the federal executive authority provides the organization, responsible for the fund, with information on permissions to display movie in cinemas. Organisation, in its turn, must notify the federal executive authority of persons who did not make a payment and who paid. Organisation also has the rights to sue a person, who failed to make a payment, and require the court to order a person to make a payment with penalties. The penalty is to be calculated as follows: 1% from the sum of payment for each day of delay with payment.

Each quarter organization must report how many payments have been made and how much has been spent. Reports must be provided to relevant federal executive authority. Each year organisation must be audited. Organisation has the right to take not more than 1% from non-tax payments, received during the year, in order to cover its administrative expenditures. Administrative expenditures include rental, audit and payroll.