on PROMOTION OF FILM ART

chapter one

GENERAL PROVISIONS

Article 1. Purpose of the Law

1.1. The purpose of this law is to establish legal a legal basis for activities of film production and regulate relations related to creating a favorable environment for filmmaking in Mongolia and the state support on the development of film art.

Article 2. Legislation on the promotion of film art

2.1. The legislation on the promotion of film art consists of the Constitution of Mongolia, the Law on Culture, the Law on Intellectual Property, the Law on Copyright, this law, and other legislative acts enacted in conformity with these.

2.2. If an international treaty to which Mongolia is a party stipulates otherwise, then the provisions of the international treaty shall prevail.

Article 3. Legal subjects

3.1. This Law shall apply to Mongolian and foreign citizens and legal entities conducting film-production activities in the territory of Mongolia, and to Mongolian citizens and legal entities participating in international film festivals.

Article 4. Legal definitions

4.1. The following terms used in this law shall have meanings as follows:

4.1.1. "film" means a work created using technology in a way that can be viewed using a series of interconnected pictures in moving form, regardless of whether accompanied by sound or not, for the purpose of distribution to the public;

4.1.2. "Mongolian film" means a film in which the writer, the right holder, or the producer is a Mongolian citizen or a legal entity, or a film directed by a Mongolian citizen;

4.1.3. "joint film" means a film co-produced with a foreign citizen or legal entity under a contract that sets out the rights and obligations of the parties, the financing and the scope of the collaboration;

4.1.4. "foreign film" means a film other than those specified in Articles 4.1.2 and 4.1.3 of this law

4.1.5. "film production" means comprehensive activities related to the production and distribution of a film;

4.1.6. "filmmaking" means the creative process until the stage of film distribution such as the development of a film project, screenwriting, shooting, editing, sound, and picture editing;

4.1.7. "writer" means a person specified in Article 4.1.1 of the Law on Copyright;

4.1.8. "right holder" means a person specified in Article 4.1.2 of the Law on Copyright;

4.1.9. "film distribution" means a process of showing a film to the public using technology;

4.1.10. "film producer" means a natural person or legal entity that has initiated and organized a film production and has rights and obligations related to the work;

4.1.11. "film distributor" means a natural person or legal entity distributing a film to the public in accordance with the Law on Copyright;

4.1.12. "film production infrastructure" means buildings, facilities, information networks, equipment, software, and databases for film production;

4.1.13. "electronic signature" has the meaning specified in Article 4.1.2 of the Law on Electronic Signature;

4.1.14. "electronic document" has the meaning specified in Article 4.1.4 of the Law on Electronic Signature.

Article 5. Directions and principles of film art promotion

5.1. The state shall maintain the following directions on the promotion of film art:

5.1.1. to support the development of artists and train and specialize the artists domestically and internationally;

5.1.2. to establish infrastructure required for film production and support technology improvement by investment, tax, financing, and other forms;  

5.1.3. increase domestic and foreign investment in the industry of film art;

5.2. The following principles shall apply to film art promotion:

5.2.1. transparency, fairness, and to be able to compete equally;

5.2.2. to have simplified regulation that provides enforceability and expressivity;

5.2.3. to not limit the freedom of artistic expression.

chapter two

POWERS OF STATE ORGANIZATIONS IN FILM ART PROMOTION

Article 6. Powers of the Government

6.1. The Government shall have the following powers in film art promotion:

6.1.1. to approve and implement programs and plans for film art promotion and human resource development;

6.1.2. to establish infrastructure required for film production, build facilities, and support technology improvement by investment, tax, financing, and other forms; 

6.1.3. to organize and support the training and specialization of artists and staff in the filmmaking;

6.1.4. to approve procedures on the nomination of the Chairperson and members of the Film Council, and its operations specified in Article 9 of this law;

6.1.5. to approve the organizational structure, the number of staff, and the rules specified in Article 9.11 of this law, based on Article 9.5 of the Law on State and Local Property

6.1.6. other powers stated by law.

Article 7. Powers of the state central administrative authority in charge of cultural affairs

7.1. The State central administrative body in charge of cultural affairs shall exercise the following powers in film art promotion:

7.1.1. to cooperate with foreign and international organizations;

7.1.2. to approve rules and regulations related to the process of film production;

7.1.3. to develop standards and norms for ensuring the security of film production, for the approval in accordance with Article 9.1 of the Law on Standardization, Technical Regulation and Accreditation of Conformity Assessment;

7.1.4. other powers stated by law.

Article 8. Powers of the state administrative agency in charge of cultural affairs

8.1. State administrative agency in charge of cultural affairs shall have the following powers in film art promotion:

8.1.1. to cooperate with and support relevant organizations for the protection of copyright in the field of film production;

8.1.2. to facilitate the participation of Mongolian films in international film events and support organizing international film festivals in Mongolia.

Article 9. Structure and powers of the Film Council

9.1. The Film Council /hereinafter referred to as the "Council"/ is responsible for commenting on the drafts of policy and decisions on promoting the film art, issuing permits to foreign citizens and legal entities to shoot films in Mongolia, and issuing opinions and conclusions on projects and activities to be financed from the Special Fund and on reimbursement of costs for filmmaking.

9.2. The Council shall consist of a Chairperson and 10 non-staff members and shall be independent in its operations.

9.3. At least 30 percent of the Council Members shall be the representatives of state organizations in charge of culture, intellectual property and finances, and the other members shall be representatives of artists and professional non-governmental organizations in the field of film production.

9.4. A professional non-governmental organization shall nominate a citizen specialized in the field of film art with at least 5 years of work experience in accordance with the procedure specified in Article 6.1.4 of this law.

9.5. An artist specialized in the field of film art with at least 5 years of work experience shall be nominated independently or by a professional non-governmental organization in accordance with the procedure specified in Article 6.1.4 of this law.

9.6. Officials and citizens specified in Articles 9.3, 9.4, and 9.5 of this law shall be approved and dismissed as members of the Council by the Cabinet member in charge of cultural affairs.

9.7. The Chairperson of the Council shall be a public servant and shall be selected in accordance with the Law on Public Service, shall be appointed and dismissed by the Cabinet member in charge of cultural affairs.

9.8. The term of office of the Chairperson and members of the Council shall be 3 years and it may be extended once.

9.9. The Chairperson and the members of the Council shall not have a common interest with the persons who applied for and the recipients of projects and events.

9.10. The Chairperson and the members of the Council shall prevent conflicts of interest in the process of making decisions, issuing opinions and conclusions by disclosing the potential circumstances, and by declining it.

9.11. The Council shall have its own office and shall be financed from its own activities, budget funds, and other income.

9.12. In the following cases, the powers of the Chairperson and members of the Council shall end before the term specified in Article 9.8 of this law:

9.12.1. death;

9.12.2. submission of a letter of resignation;

9.12.3. appointed or elected to another position;

9.12.4. proven to have committed a crime with the effective Court decision;

9.12.5. other grounds specified by law.

9.13. The Council shall discuss issues at its meeting and shall make decisions by majority vote in the form of a resolution.

9.14. The Council shall have its financial statements annually audited and report them to the public.

9.15. The Council shall notify the public at least 30 days in advance of the approval, amendment, or annulment of rules related to film production by an authorized person.

9.16. The Council shall have the following powers:

9.16.1. to submit an opinion on the drafting of state policy and legislation on film production;

9.16.2. to grant permits specified in Article 20.1 of this law;

9.16.3. to cooperate with non-governmental organizations and legal entities operating in the field of film production and support their activities within the framework of relevant legislation;

9.16.4. to organize, submit opinions and conclusions on reimbursement of a certain percentage of costs for filmmaking;

9.16.5. to organize, submit opinions and conclusions on disbursing funds and loans from the Film Promotion Fund;

9.16.6. to monitor the funding and fund utilization of projects and events, receive reports from relevant organizations, and make conclusions on the reports;

9.16.7. to establish age ratings for film distribution;

9.16.8. to approve and implement plans to support young artists;

9.16.9. to nominate Mongolian films in international film events, vote for participation, and support organizing international film festivals in Mongolia;

9.16.10. to ensure and monitor the information security of the database and digital services;

9.16.11. other powers provided by law.

chapter three

CREATING A DATABASE FOR FILM, INTRODUCING DIGITAL SERVICES

Article 10. Creating a database

10.1. As provided in the procedure specified in the Law on Culture, a specialized database shall be established for the purpose of compiling, transmitting, using, storing information, and providing digital services related to film production activities, and the database shall be managed by the Council.

10.2. The specialized database specified in Article 10.1 of this law shall contain the following information:

10.2.1. legislation and other legal documents concerning film production;

10.2.2. statistics on the film industry;

10.2.3. information related to the state-funded production and financial support for the year;

10.2.4. information related to the possession, use, and distribution of works protected by copyright;

10.2.5. information related to the organizations and human resources operating in the field of film art;

10.2.6. information related to Mongolian and joint films;

10.2.7. information related to foreign films shot in the territory of Mongolia;

10.2.8. film criticism and research information;

10.2.9. budget and costs to support film, and its utilization;

10.2.10. reimbursement of film production costs;

10.2.11. others related to non-copyrighted and non-confidential information.

10.3. Films made of state and local budgets shall be transferred to, stored, and protected at the State Archives in accordance with the Law on Archives and Recordkeeping.

10.4. The Council may keep documents related to film and film production activities other than those specified in Article 10.3 of this law.

Article 11. Introducing digital services

11.1. The State shall introduce digital services related to film production.

11.2. The procedure specified in Article 6.4 of the Law on Archives and Recordkeeping and the Law on Electronic Signature shall be applied when providing digital services.

11.3. Matters related to granting permits to foreign citizens and legal entities for filming in the territory of Mongolia and other requirements for collecting, receiving and resolving documents for the filmmaking cost reimbursement shall be provided in the regulations specified in Articles 13.5 and 17.6 of this law.

11.4. The office of the Council shall ensure the reliability and security of the processes for providing digital services, operating electronic documents, the use of electronic signatures, and the security of information systems.

chapter four

PROMOTION OF THE DEVELOPMENT OF FILM ART

Article 12. Funding to promote film art

12.1. A Film Promotion Fund shall be established for the purpose of the state promotion of filmmaking.

12.2. The Film Promotion Fund shall consist of the funds specified in Article 6 of the Law on Government Special Fund and shall provide support in the following forms:

12.2.1. non-repayable funding;

12.2.2. grant repayable discounted loans.

12.3. The amount of funds required from the state budget to provide support in the form specified in Article 12.2 of this law shall be reflected and approved in the annual state development plan and the state budget for that year.

12.4. The Government shall approve the funding amount specified in Article 12.2 of this law.

Article 13. Disbursement of Film Promotion Fund

13.1. Non-repayable funding of the Film Promotion Fund shall be granted for the implementation of the following projects and events:

13.1.1. making a film that exhibits Mongolian history, culture, and lifestyle, or makes positive impacts on the upbringing, development, and building of the good habits on social health, healthy lifestyle of children and youths, or films made to compete in international film festivals, with expressions of director's personal creativity, aesthetic values, and views;

13.1.2. preserving and restoring Mongolian films;

13.1.3. participating in international film festivals and exhibitions with Mongolian films and organizing international film festivals in Mongolia;

13.1.4. support organizing the activities for the development and qualification of film artists and staff.

13.2. Repayable discounted loans of the Film Promotion Fund  shall be granted for the implementation of the following projects and events:

13.2.1. make films other than those specified in Article 13.1.1 of this law;

13.2.2. introduce new technologies, software, and innovations to improve the infrastructure required for film production;

13.3. Discounted loans specified in Article 13.2 of this law shall be granted through banks. The bank shall be determined through a selection process.

13.4. The following persons shall not be granted with discounted loan specified in Article 13.2 of this law:

13.4.1. a person with an outstanding loan from the Film Promotion Fund;

13.4.2. a person that is established to have used the loan for non-dedicated purposes;

13.4.3. a person with outstanding debt to the Social Insurance and Tax authorities as of the last day of a project application.

13.5. The Government shall approve the procedures on funding from the Film Promotion Fund, criteria for banks, selection of banks, granting loans, repayment, and monitoring of discounted loans.

Article 14. Other support for natural persons and legal entities

14.1. The matters related to providing tax support for natural persons and legal entities conducting film production shall be regulated by the relevant legislation.

14.2. The Government shall organize measures for joining and negotiating international treaties regarding double taxation and investment with leading countries in film production.

14.3. State-owned filming facilities and required equipment for film shooting shall be utilized with preferential terms for Mongolian and joint filmmaking. The Cabinet members in charge of culture, education, and finance, and budget shall jointly approve the procedure on use with preferential terms.

14.4. Artists succeeded at international film festivals shall be awarded cash prizes specified in the Law on Culture.

14.5. A special category of visa shall be granted to a foreign national or stateless person arriving in the territory of Mongolia for the purpose of filmmaking and shall be determined in accordance with Article 9.2.1 of the Law on the Legal Status of Foreign Nationals.

chapter five

REIMBURSEMENT OF FILMMAKING COSTS AND ITS REQUIREMENTS

Article 15. Requirements for reimbursement of a certain percentage of costs for filmmaking

15.1. A certain percentage of the costs shall be reimbursed in the case of a foreign legal entity making a film in the territory of Mongolia independently or jointly with a Mongolian legal entity for the purpose of international distribution.

15.2. Costs specified in Article 15.1 of this law shall be planned in accordance with international standards and reflected in the annual state development plan and the annual state budget, and these costs shall not be reduced from those specified in the previous year's budget.

15.3. Costs specified in Article 15.1 of this law are prohibited to be spent on non-dedicated purposes and any unused budget balance from one fiscal year shall be continued to be spent in the next fiscal year.

15.4. Precondition for reimbursement is that a foreign legal entity spends an amount of USD 500,000 or more on filmmaking in the territory of Mongolia on the following eligible costs:

15.4.1. costs paid for the goods, works, and services purchased from a taxpayer natural person or a legal entity in Mongolia;

15.4.2. costs for renting professional hardware and equipment from abroad that are proved not to be available in Mongolia;

15.4.3. taxes paid in Mongolia.

15.5. Salary and wages of the art and film crews shall not exceed 40 percent of the total costs specified in Article 15.4 of this law.

Article 16. Determination of eligible costs

16.1. Costs for filming shall include salaries of a film director, cinematographer, art director, producer, and art and film crews, as well as service, rent and other expenses. The Government shall determine a detailed list of eligible costs in the procedure specified in Article 17.6 of this law.

16.2. Eligible costs specified in Article 16.1 of this law shall not include the following costs:

16.2.1. purchase of a film set, studio infrastructure and real estate;

16.2.2. cost for legal service, financial and other consultations;

16.2.3. fines, penalties, bank guarantees, loans, loan interest and fees;

16.2.4. costs related to Court and arbitration proceedings;

16.2.5. certain assets reciprocally transferred to ownership;

16.2.6. value-added tax;

16.2.7. costs received from state and local budgets;

16.2.8. donations;

16.2.9. costs for concluding financial lease agreements and interest;

16.2.10. costs for purchasing and developing software not related to filmmaking;

16.2.11. other costs.

Article 17. Estimation of reimbursement percentage

17.1. A person specified in Article 15.4 of this law shall be reimbursed for 30 percent of the costs.

17.2. A person specified in Article 17.1 of this law shall be reimbursed for 30 percent of the editing, sound, and picture editing costs, if at least 50 percent of team members in charge of the editing, sound, and picture editing in the territory of Mongolia are Mongolian artists and staff.

17.3. If a film made by a person specified in Article 17.1 of this law is in conformity of the cultural criteria approved by the Government, an additional 10 percent of the costs specified in Article 15.4 of this law shall be reimbursed.

17.4. A foreign art and film crew participating in filming specified in Article 15.4 of this law shall be reimbursed for five percent of the salary for the days working in Mongolia.

17.5. Mongolian film right holders who have positively promoted Mongolia internationally may be reimbursed up to 20 percent of the filmmaking costs in accordance with the principles and procedures specified in Articles 15-19 of this law.

17.6. The Government shall approve the procedures for applying reimbursement of film production costs, reviewing and registering projects, concluding agreements, assessing and reporting, and reimbursing a certain percentage of the costs.

Article 18. Request and project registration

18.1. The budget, criteria and relevant information related to the reimbursement of a certain percentage of the filmmaking costs shall be prepared in Mongolian and foreign languages and shall be published regularly and internationally in accordance with the procedure specified in Article 17.6 of this law.

18.2. An applicant who is submitting an application /hereinafter referred to as a "request"/ for the reimbursement of a certain percentage of the filmmaking costs in the territory of Mongolia shall be registered in the state registration of legal entities of Mongolia.

18.3. The request and project of a person specified in 18.2 of this law shall not violate the legislations of Mongolia, shall not notably distort Mongolian history, and shall not contain any content promoting war, aggression, pornography, and violence.

18.4. The Council shall receive the request and review the project. The request and project shall be rejected if it does not meet the requirements specified in Articles 17.6 and 18.3 of this law.

18.5. The Council shall register eligible requests and projects and issue a certificate. The certificate shall be valid for a period of 2-4 years and an agreement shall be concluded to reimburse a certain percentage of the filmmaking costs.

18.6. Expenses incurred after entering into the agreement shall be deemed the reimbursement costs.

18.7. If the project is not feasible due to a force major event or unforeseeable circumstances, the applicant shall immediately notify the Council, and the certificate shall be revoked, and the agreement shall be deemed terminated.

Article 19. Application and review

19.1. A person specified in Article 18.5 of this law shall submit an application for reimbursement of a certain percentage of filmmaking costs.

19.2. Applications shall be reviewed by the Council.

19.3. The applicant shall submit an audited report by an international audit organization and original accounting documents, and authorize the review of the costs.

19.4. The Council shall organize the process for the tax authority to obtain information on the costs consumed in Mongolia.

19.5. The Council shall review the expenditure documents, make a conclusion on the estimation of the reimbursement percentage and deliver it to the Cabinet member in charge of cultural affairs.

19.6. Based on the conclusion on the reimbursement percentage by the Council, the Cabinet member in charge of cultural affairs shall make a decision on the reimbursement and transfer it to the account specified in the agreement. The reimbursement may be transferred in installments.

19.7. The costs specified in Article 19.6 of this law  shall not be reimbursed in the following cases:

19.7.1. the applicant has violated the legislation and the agreement specified in Article 18.5 of this law;

19.7.2. the applicant has not provided the relevant documents and auditor's report, has not been permitted to review the costs or has not submitted them within the period specified in the rules;

19.7.3. expenditure document does not comply with the requirements, time, and activities specified in laws or the project objectives;

19.7.4. failure to fulfill contractual obligations, and failure to confirm expenses and their payment;

19.7.5. the applicant bankrupted, the branch or representative office was liquidated.

19.8.The Council shall publish and promote a summary of the person that reimbursed for filmmaking costs, the name and amount of the project, in the specialized database specified in Article 10.1 of this law.

chapter six

REQUIREMENTS FOR FILM PRODUCTION

Article 20. Permit for filming

20.1. To make a film in the territory of Mongolia, a permit shall be granted to foreign nationals and legal entities.

20.2. A person specified in Article 20.1 of this law shall submit a request to the Council at least 14 days prior to filming with the following documents:

20.2.1. screenplay synopsis, producer's introduction, information of the Mongolian partner;

20.2.2. work schedule and plan;

20.2.3. information on whether there is a negative impact on the film location and the environment;

20.2.4. others specified by law.

20.3. The Council shall review the request specified in Article 20.2 of this law and make a decision within 10 days.

20.4. It is prohibited to shoot a film without the permit specified in Article 20.1 of this law.

20.5. To change the location, time, and content specified in the permit, the Council shall be notified in accordance with the procedure specified in Article 20.7 of this law.

20.6. The procedures set forth in the Law on Culture, the Law on the Protection of Cultural Heritage, and the Law on Special Protected Areas shall be followed when filming in a historical and cultural complex site and specially protected areas.

20.7. The Cabinet member in charge of cultural affairs shall approve the rule for permits for filming in the territory of Mongolia.

20.8. Applicants for a permit to film in the territory of Mongolia shall pay a fee in accordance with Article 22.1.8 of the Law on State Stamp Duties.

Article 21. Classification of film distribution

21.1. The following age ratings shall be established for film distributions in the territory of Mongolia:

21.1.1. all ages admitted;

21.1.2. 13 and older admitted;

21.1.3. 18 and older admitted.

21.2. It is prohibited to broadcast a film with an age rating of 18 or older as specified in Article 21.1.3 of this law through broadcast and cable channels during daytime or from 06:00 to 22:00 and to show it to a minor in cinemas and entertainment centers.

21.3. The state administrative central body in charge of cultural affairs and the State administrative agency in charge of communication matters shall jointly approve the classification criteria specified in Article 21.1 of this law and the rules to be followed for film distribution in accordance with international standards.

Article 22. Information on film distribution

22.1. The cinema service provider shall send distribution information on film distributors, film names, types and the duration of films to the Council weekly.

22.2. The Cabinet member in charge of cultural affairs shall approve the procedure for providing information on film distribution.

22.3. Cinemas shall be equipped and marked in accordance with standards for the disabled and elderly persons, and be responsible for increasing accessibility.

chapter seven

MISCELLANEOUS

Article 23. Monitoring the implementation of the law

23.1. The state central administrative body in charge of cultural affairs, the state administrative agency responsible for cultural affairs, the Council, and the specialized inspection agency shall monitor the implementation of the legislation on the promotion of film art.

Article 23. Liabilities for violators of the law

24.1. If an action of an official violating this law is not of a criminal nature, he/she shall be subject to liability specified in the Law on Public Service.

24.2. A person or legal entity that violates this law shall be subject to liability specified in the Law on Infringements.

Article 24. Entry into force of the law

25.1. This law shall enter into force on January 1, 2022.

THE CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA G.ZANDANSHATAR