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Ukraine introduces a cash-rebate system for local and foreign producers


- The country has adopted a new law on state support of cinema, through which films can apply for 80% state funding of their budget and producers have access to a 25% cash rebate

Ukraine introduces a cash-rebate system for local and foreign producers
Ukraine's Hutsul Alps, where films such as Zhang Yimou's House of Flying Daggers were filmed

The Ukrainian Parliament has finally adopted a new version of the law on state support of cinema, which will radically change the relationships between the state and film and TV producers - not only Ukrainian ones, but also those from abroad. According to the new law, it is assumed that the producer of a feature film can apply for 80% state funding of its production budget (as opposed to the maximum 50%, which was all they were able to apply for up to now). Producers of TV series can also qualify for state funding: they are entitled to up to 50% coverage of their production expenditure as a grant from the state.

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One revolutionary innovation is the implementation of a cash-rebate system for producers (including foreign ones) of part of the funds spent on production in the territory of Ukraine. The new version of the law requires the state to provide refunds to foreign and Ukrainian producers, who produced the film at their own expense, of up to 25% of the money spent by them in Ukraine for the production of films and TV series, and 10% of the costs spent in the territory of Ukraine that can be qualified as pay for the cast and crew who are not residents of Ukraine and do not pay personal income tax in the country.

Victoria Yarmoshchuk, executive director of the Ukrainian Motion Picture Association, said: "For the Ukrainian film industry, the new law on cinema, which, among other things, introduces a system of cash rebates for foreign producers of films and television, is a huge step forward, because now Ukraine has become competitive on the global co-production market. Now we can offer producers from around the world not only our unique filming locations and professional services, but also an adequate system of returning production costs. We expect a rapid growth in film production in Ukraine in the coming years and are ready to consult foreign producers on how to make a film in Ukraine. The Ukrainian Motion Picture Association has a database of key production and service companies, we have established contacts in administrative organisations, and we are also creating Location4Film, a database of Ukrainian filming locations."

According to the new law, production companies will undergo an annual competitive selection, and each of the selected companies will receive funding for the production of at least two films for the big screen (80% of the funding will be provided by the state, and 20% by the producer) and/or TV series and films for television (50% of funding by the state, and 50% by the producer) per year. In addition, each production company applying to receive state aid will have to demonstrate financial and production expertise, and each project will have to pass a cultural and production test.

Furthermore, funds will be allocated not only directly for production, but also for the development and pre-production of projects, as well as their post-production, distribution (including international) and festival promotion. Also, in order to promote the national film product, the law equates the advertising of Ukrainian films with social advertising.

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