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. Last Updated: 07/27/2016

Publishers Ask Duma for Tax Break

The National Association of Publishers is lobbying the State Duma to ease the tax burden on mass media and exempt them from running mandatory government ads free of charge.

Earlier this year, the association helped push through amendments to a profit tax bill allowing companies to write off more advertising expenses than before, which would significantly benefit media outlets and help them boost profits, said Alexei Voinov, a legal expert with the association, in a telephone interview Tuesday.

Voinov said he hoped the bill, which is part of the new Tax Code and has passed a first reading, will be passed by both chambers of parliament by the end of the year, although it remains unclear whether the amendment on writing off advertising costs will survive the brutal battle between the government and the Duma.

The association is also fighting for amendments to a 1995 law on advertising, which requires media outlets to give up as much as 5 percent of their advertising space free of charge to government agencies wishing to place public announcements.

The association is lobbying Duma deputies to introduce an amendment to this law requiring state agencies to pay for everything except so-called social ads — such as reminders to children to call their parents, Voinov said. He added that the definition of such social announcements must be clarified.

Until this law is amended, however, Russian newspapers and television stations will be obliged to run whatever free advertisements the state requests.

Reached by telephone last week, an advertising manager at one of Russia's biggest national dailies said her newspaper "regularly" runs free ads for government agencies.

"We do it regularly. … It may seem unfair, but we prefer not to argue with agencies like the Tax [Ministry]," said the manager, who asked that neither her name nor her newspaper's be used.

On April 10, Tax Minister Gennady Bukayev sent a letter to Derk Sauer, chief executive of The Moscow Times' parent company Independent Media, asking the publishing holding to run free advertisements for the ministry's new web site (www.nalog.ru). In compliance with the law, The Moscow Times and its sister publication, the Russian business daily Vedomosti, will run such ads twice a week until September as requested by Bukayev. Playboy and other magazines published by Independent Media may also run these ads.

In most Western countries, even those where the media enjoy certain tax exemptions, periodic publications and broadcasters are not required by law to run government announcements free of charge, according to Voinov.

Russian media have enjoyed an assortment of tax exemptions since 1995. They do not pay the 20 percent value-added tax and pay only part of the 19 percent profit tax. These exemptions were to expire in 1998, but were extended after the financial crisis that August, which drove some newspapers to the brink of bankruptcy. The prolonged exemptions are set to expire Dec. 31, 2001, but media groups and Voinov's associations are lobbying to extend them.