About CASH REBATES and regarding the provision of state aid

The Law of Ukraine “On Amendments to the Law of Ukraine “On the State Support for the Cinematography in Ukraine” regarding the provision of state aid to reimburse a part of the qualified costs and expenses incurred by a foreign subject of cinematography during the production (creation) of film in Ukraine” No. 130-ІХ, dated September 20, 2019, entered into force on October 19, 2019.

WHAT ARE CASH REBATES AND WHO HAS THE RIGHT TO APPLY FOR THEIR RECEIPT

The adopted changes provide for the provision of state support for cinematography in the form of state aid to reimburse a part of the qualified costs and expenses incurred by foreign cinematographers during the production (creation) of film.

A foreign cinematographer is the only entity that can apply for a cash rebate.

At the same time, the absence among the owners of foreign cinematographer (including ultimate beneficial owners (controllers)) of participants, shareholders, and officials–residents of Ukraine shall be an indispensable prerequisite for receiving aid to reimburse a part of the qualified costs and expenses.

From January 01, 2021, another important requirement will be that the recipients of cash rebates shall be the taxpayers under the general taxation system.

Films that passed the cultural test shall be the object of state support in the form of a cash rebate.

VOLUMES IN WHICH CASH REBATES SHALL BE PROVIDED:

1. Reimbursement of 25 % of the total amount of qualified costs and expenses (payments):

payments for employees; fees for the services to individuals (actors and/or other members of the film crew), including, but not limited to the professional fees and other remuneration; purchase of goods, works, services; property lease; other costs and expenses directly related to the production of the film produced in Ukraine (except for depreciation of fixed assets, other non-current tangible and intangible assets; negotiation costs; financial costs (including interest on loans); operating costs not included in the cost of film production, the cost of film distribution and travel expenses of the film crew members and actors during filming outside of Ukraine, wages or any other remuneration paid (provided) to actors or members of the film crew, which are non-residents of Ukraine (except for expenses subject to taxation in the territory of Ukraine).)

Also, the subject may receive an additional reimbursement of 5 % of the total qualified costs and expenses (payments) if at least four cultural criteria of the cultural test are exclusively Ukrainian ones 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, which make it possible to identify books of Ukrainian authors, Ukrainian literary works or events of the armed aggression of the aggressor state against Ukraine (etc.).

CONDITIONS FOR PROVIDING CASH REBATES:

  • expenses are fully or partially incurred in Ukraine during the production (creation) of the film for the benefit of a person who conducts business activities and is registered as an economic entity in Ukraine;
  • the film meets at least one of these requirements:
  1. the film is a fiction or animated film intended for viewing in cinemas with a total running time of at least 74 minutes;
  2. the film is a fiction television or animated film consisting of one or more series with a total running time of at least 74 minutes;
  3. the film is a documentary film intended for viewing in cinemas and/or television coverage with a total running time of at least 52 minutes;
  4. the film is a television or an animated television series, or a separate part (episode) with a total running time of at least 40 minutes;
  5. the film is a promotional film (a film that is exclusively an advertising tool for the promotion of a trademark, brand name, name of an individual or a legal entity) or a music video (a film whose soundtrack consists exclusively of one piece of music) intended for television coverage, viewing in cinemas and/or for putting on the Internet with a total running time of at least 20 seconds;
  •  the film passed the cultural test;
  • the producer is a foreign entity that concluded an agreement for the production of the film (or part thereof);
  • the total amount of qualified costs and expenses (payments) on the day of application is at least:
  • 4 thousand of subsistence minimums for able-bodied persons for fiction or animated films;
  • 1,120 of subsistence minimums for able-bodied persons for fiction television or animated films;
  • 700 subsistence minimums for able-bodied people for documentary films;
  • 3,360 subsistence minimums for able-bodied persons for television or animated television series, or a separate part (episode);
  • 1,920 subsistence minimums for able-bodied people for a promotional film.

2. Reimbursement of a part of the costs and expenses (payments) actually incurred by the costs and expenses subject for paying remuneration to actors and members of the film crew who took part in the film that claims for state support, who are non-residents of Ukraine, conduct their activities and/or live outside Ukraine, if such payments are subject to taxation in the territory of Ukraine, in the following amounts:

  • 10 percent of the total amount of such payments in case of paying personal income tax imposed on them in the cities of Kyiv and Sevastopol;
  • 4.5 percent of the total amount of such payments in the case of paying personal income tax in the relevant territory of Ukraine (except for the cities of Kyiv and Sevastopol).
PROCEDURE FOR OBTAINING CASH REBATES:
  • Those wishing to receive this type of support before completing the production of the film shall apply to the State Cinema Committee with a request for a preliminary opinion on the film the production of which is planned or is in progress regarding the film’s passing cultural test and relevant documents.

    A preliminary opinion regarding the film’s passing cultural test shall be provided to the subject within 40 days from the date of receipt by the State Cinema Committee of the application and documents.

    To receive state aid to reimburse a part of the qualified costs and expenses incurred during the production (creation) of film, a cinematographer who received a preliminary opinion regarding the film’s passing cultural test within one year from the date of the film completion shall apply to the Ukrainian State Film Agency with an application to receive opinion on the film’s passing cultural test and relevant documents.

    The decision to provide state aid or to refuse to provide the subject with such aid in part or in full shall be made by the State Cinema Commission within 40 days from the date of receipt of the application and documents.

    Payment of the state aid for the reimbursement of a part of the qualified costs and expenses shall be made by the State Cinema Commission by transferring funds to the applicant’s bank account within 10 banking days from the date of the relevant decision.

    Foreign subjects (including producers) shall receive state support in the form of state aid to reimburse a part of the qualified costs and expenses incurred by the subject during the production (creation) of the film through the mediation of Ukrainian subject based on an agreement concluded between such subjects according to which the Ukrainian subject is involved in the production of the film in the territory of Ukraine.