On Aug. 11 President of Ukraine Volodymyr Zelensky has signed amendments to a law that aims to make Ukraine’s film production industry more affordable for foreign companies. The law came into force on Aug. 13.
As stated on the parliament’s website, foreign companies are now excused from being taxed for subsidies they receive from the Ukrainian government to partially cover their film production costs in Ukraine. In addition, the film industry’s services exported abroad now have no value-added tax. This covers such services as: production and composition of videos, motion pictures, animated films, television programs, advertisement videos, photo advertising materials, and computer graphics.
Income received through services that are not exported will be taxed at the normal rate, says Veronika Dyomina, a lawyer at law firm Epravo.
“The undeniable advantages of the adopted legislative developments include the stimulation of foreign capital in the Ukrainian economy, in particular, in the field of film production,” Dyomina says.
According to the law’s explanatory note, Ukraine follows the example of such Eastern European countries: as Croatia, Romania, Hungary, Bulgaria, Lithuania, Latvia, Slovakia, and Slovenia among others. In these countries many local film and video companies produce content for foreign clients, since here investors have benefits such as rebates and tax refunds.
“International experience shows that for $1 of investment in video and movie production $1.5-$3 of income is made in related services, and for each person involved in the production process one more job is created in a related field,” according to the explanatory note.
Before becoming president, Zelensky had an acting career and founded one of Ukraine’s largest television entertainment production companies, Kvartal 95 Studio.
