New laws, scheduled to come into effect in Ukraine from Jan 1, are expected to help to provide the recovery of the country’s film industry, which has been in decline since the collapse of the USSR.

Under the terms of the law, the Ukrainian government plans to abolish VAT in all stages of national film production until 2016 and create conditions for the attraction of investments from potential investors to the Ukrainian movie industry through the implementation of other tax benefits.

In addition, from Jan 1, 2011 a special fund for the support of the Ukrainian cinematography is expected to be established. The new fund will be formed from the cash, raised from the demonstration of foreign movies in the Ukrainian cinemas and sales of licensed video. Its estimated volume has not yet been announced.

According to the Ukrainian National Union of Cinematographers, the current volume of financing of the domestic movie industry is 10 times less than in Kazakhstan, and 446 times less than in Russia.

In 2009, only $537,000 (UAH4.3 million) was allocated from the state budget on the development of Ukrainian movie industry. In addition, the majority of these funds were allocated for the repayment of past debts. This has also resulted in the fact that last year only 23 movies were produced in Ukraine, of which 13 films produced on state funds and 10 on the investments of local broadcasting companies.

Thanks to the new law, the Ukrainian National Union of Cinematographers (UNUC) is planning to pay more attention for the development of the Ukrainian film studios, which, according to the head of the Union Sergey Trymbach, are “in terrible condition.” UNUC also intends to participate in the legislative processes for the protection of copyright and to provide conditions for the development of the Ukrainian network of cinemas. Today, the total number of screens in Ukraine is only 300, compared to Russia’s 2,000.

The Ukrainian authorities are also planning to increase the attractiveness of Ukraine among the US majors, by creating conditions for them for making movies in the territory.

According to experts of the Ukrainian business paper Economic News, today Ukraine is still not competitive even with its neighbors Romania and Hungary countries in terms of attraction of Western studious.