The Ministry of Digital Development refused to extend IT support measures to the music industry
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The initiative to extend benefits for IT companies to the music industry did not find support in the Ministry of Digital Development. They note that music streaming services may already be included in the register of accredited companies. But in order to receive benefits, music labels must justify receiving more than 30% of revenue from IT activities. In this regard, market participants believe that digital content distributors who provide music downloads for streaming could apply for benefits.
The Ministry of Digital Development did not support the initiative to extend the same tax incentives to the Russian music industry as to IT companies, a source close to the government told Kommersant: “Even now, the benefits apply to music streaming services that are accredited as IT companies, develop and use the appropriate software.
There is no need to extend support to music labels, since the creation of music and the promotion of artists do not belong to IT activities, says the interlocutor of Kommersant. According to him, the industry “is more logical to apply for support to the Ministry of Culture.”
In May, the National Federation of the Music Industry (NFMI, previously united Warner Music, Universal Music, Sony; now the founders are not disclosed) turned to the head of the Ministry of Digital Development Maksut Shadayev, proposing to include music labels in the list of organizations that can receive accreditation of IT companies, Vedomosti reported. “.
In order to qualify for tax benefits as an IT company, an organization must be accredited, the Ministry of Digital Resources recalled: “This requires core revenue from IT activities of more than 30%. Materials confirming the presence of IT-revenue from the music industry have not been received by the Ministry.”
Last fall, the Ministry of Digital Development specified the types of activities of Russian IT companies that could qualify for benefits, and their employees for a deferment from mobilization (see Kommersant dated October 10, 2022). According to the rules, companies that provide services in the field of “granting rights to use objects of copyright and related rights related to phonograms” — that is, music streaming services — can be classified as accredited IT companies.
“Kommersant” got acquainted with the response of the Ministry of Digital Transformation to the appeal of the NFMI dated June 2. It follows from it that, in accordance with the order of the Ministry of October 8, 2022, only those accredited organizations that have an income of more than 70% “from the provision of services using their own programs for electronic computers (computers)” are entitled to apply income tax benefits. . The NFMI says it is preparing “additional detailed justifications” according to which the music industry can be attributed to the IT sphere.
“Unfortunately, the state does not notice the market, which in every sense has an important social role,” believes Mikhail Minin, general director of MTS Entertainment. According to him, 58% of Russians listen to music, which is comparable to the film distribution market, where there is support. “In the past few years, the music market has been shaking, the number of artists, foreign catalogs and concerts has decreased, while the number of viewers, listeners and consumers of projects has not decreased,” the top manager emphasized.
It is difficult to consider the websites of music labels equipped with a personal account for the user as “software”, argues Multiza CEO Andrei Volyanik.
At the same time, Mr. Volyanik clarifies, as a rule, labels are used to deliver content to digital platforms of specialized distributors: “The latter, in order to receive benefits, could transfer content storage and delivery services to a separate legal entity that meets the requirements for IT companies.”
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