The Law of Ukraine “On Amendments to the Law of Ukraine “On State Support of Cinematography in Ukraine” regarding the provision of a state subsidy for the return of a part of the qualified expenses incurred by a foreign business entity of cinematography in the production (creation) of a film in Ukraine” No. 130-IX dated 20.09.2019 came into force on October 19, 2019.
What are cash ribates and who has the right to claim their receipt
The adopted amendments provide state support for cinematography in the form of a state subsidy for the return of a part of the qualified costs made by foreign filmmakers in the production (creation) of the film.
The only entity that can apply for cash ribate is a foreign business entity of cinematography.
At the same time, a prerequisite for obtaining a subsidy for the return of a part of the qualified expenses is the absence among its owners (including final beneficial owners (controllers)), participants, shareholders, as well as officials of residents of Ukraine. From January 1, 2021, another important requirement will be the fact that recipients of cash ribate should be on the general system of taxation.
The object of state support in the form of cash ribate are films that have passed the cultural test.
Volumes in which cash ribates are provided:
1. Reimbursement of 25% of the total amount of qualified expenses (payments) : employee salaries; payment for services to individuals (actors and/or other crew members), including, but not limited to, fees and other remuneration; purchase of goods, works, services; lease of property; other costs directly related to the production of a film produced in Ukraine (except fordepreciation of fixed assets, other non-current tangible and intangible assets; expenses for negotiations; financial costs (including interest on loans); operating costs that are not included in the production cost of the film; the cost of film distribution and travel of film crew members and actors during filming outside Ukraine; wages or any other types of remuneration that are paid (provided) to actors or members of the crew who are non-residents of Ukraine (except for expenses that are taxed on the territory of Ukraine) ).
Also, the entity may additionally receive a refund of 5% of the total amount of qualified expenses (payments) if at least four cultural criteria of the cultural test are exclusively Ukrainian or if the film contains scenes of at least 5% of the total duration of the film with reading books of Ukrainian authors or actions of characters that allow identifying books of Ukrainian authors, Ukrainian literary works or events of armed aggression of the aggressor state against Ukraine (etc.).
Terms of providing cash ribates:
— expenses fully or partially incurred in Ukraine during the production (creation) of the film in favor of a person engaged in economic activity and registered as a business entity on the territory of Ukraine;
— the film meets at least one of the following requirements:
a) it is a game film or an animated film intended for viewing in cinemas, a total timing of at least 74 minutes;
b) it is a game television film or an animated film consisting of one or more series, a total timing of at least 74 minutes;
c) it is a documentary intended for viewing in cinemas and/or for television, with a total timing of at least 52 minutes;
d) it is a television series or an animated television series, or a separate part (series), a total timing of at least 40 minutes;
e) it is an advertising film (a film that is exclusively an advertising tool for promoting a trademark, brand name, name of a natural person or name of a legal entity) or a music video (a film whose sound series consists exclusively of one piece of music) designed to be shown on television, viewing in cinemas and/or for placement on the Internet, with a total timing of at least 20 seconds;
— the film passed a cultural test;
— the producer is a foreign business entity who has concluded a contract on the production of the film (or part of it);
— total amounts of qualified expenses (payments) on the day of application are at least:
— 4 thousand living wages for able-bodied persons for game or animated films;
— 1 thousand and 120 living wages for able-bodied persons for game TV or animation films;
— 700 living wages for able-bodied persons for documentaries;
— 3,360 living wages for able-bodied persons for TV series or animated TV series, or in a separate part (series);
— 1,920 living wages for able-bodied persons for an advertising film.
2. Reimbursement of a part of the expenses (payments) actually carried out by the entity for payment of remuneration to actors and members of the film crew who participated in the film claiming state support, which are non-residents of Ukraine, carry out their activities and/or residing outside Ukraine, if such payments are entity to taxation on the territory of Ukraine, in the following amounts:
— 10 percent of the total amount of such payments in case of payment of personal income tax on the territory of the cities of Kyiv and Sevastopol;
— 4.5 percent of the total amount of such payments in case of payment of personal income tax on the relevant territory of Ukraine (except for the cities of Kyiv and Sevastopol).
The procedure for obtaining cash ribates:
Those wishing to receive this kind of support before the completion of the film production should apply to the Ukrainian State Film Agency with a preliminary conclusion on the passing of the film, which is planned or taking place, a cultural test and relevant documents.
Preliminary conclusion on the passage of cultural test film is given to the entity within 40 days from the date of receipt of applications and documents to the State Film Agency.
In order to obtain a state subsidy for the return of a part of the qualified costs incurred in the production (creation) of the film, a cinematography subject, who received a preliminary conclusion about passing a cultural test film within one year from the date of completion of production of the film should apply to the State Film Agency of Ukraine with a statement about the conclusion on the passage of the cultural test film and the relevant documents.
The decision to grant a state subsidy or refuse to grant such a subsidy to the entity is fully or partially adopted by the State Film Agency within 40 days from the date of receipt of the application and documents.
Payment of the state subsidy for the return of a part of the qualified expenses is carried out by the State Film Agency by transferring funds to the applicant's bank account within 10 business days from the date of adoption of the relevant decision.
Foreign entities (including producers) receive state support in the form of a state subsidy to return part of the qualified expenses incurred by the entity in the production (creation) of the film, through a Ukrainian entity on the basis of the contract concluded between such entities, under which the Ukrainian entity is involved in the production of the film on the territory of Ukraine.
Source: Ukrainian State Film Agency
Law of Ukraine “On Amendments to the Law of Ukraine “On State Support of Cinematography in Ukraine” regarding the provision of a state subsidy for the return of a part of the qualified expenses incurred by a foreign business...”