Armenia’s cash-rebate plan for foreign films faces legal and ethical challenges

May 30, 2025

Alleged Conflict of Interest, Alleged Financial Misconduct, Community Posts, Political Intervention

UPDATE July 31: A response to this article is published here:

Rebuttal Regarding the Articles “Armenia’s Cash Rebate Plan for Foreign Films” and “Armenia: Turbulence in the Local Film Industry”

The Armenian Government’s new promise to refund up to 35 percent of a producer’s local spending is being greeted at home not as a success story but as a textbook case of how public film money can be bent out of shape. Legal analysts say the Cabinet decree that launched the rebate clashes with the country’s own Cinematography Law, while watchdog groups point to a revolving door between the state body handing out the money and a single private production company that helped design the system.

The rebate was unveiled on 10 April, when Decision 412-N sailed through the Cabinet in a single sitting. It fixes a base refund of 25 percent and adds up to ten further percentage points for projects that market Armenia on screen, bringing the total to 35 percent. Yet Article 18 of the Cinematography Law already pegs the rebate corridor at 10 to 40 percent and stipulates that only Parliament may alter it. Government lawyers insist the narrower band merely “operationalises” the statute, but constitutional specialists consulted by Film Industry Watch say a decree cannot override primary legislation. If that view prevails in court, any rebate contracts signed under the decree would be void from day one.

Fiscal concerns surfaced even before the measure was adopted. According to a briefing note published this month by the Council of Europe’s European Audiovisual Observatory, the Ministry of Finance warned that the new rules expose the budget to open-ended liabilities. The objections were set aside; the decree was passed unchanged and will enter into force on 11 May.

A new agency, an old relationship

Responsibility for vetting rebate applications rests with the Cinema Foundation of Armenia (CFA), a public body created last year to replace the National Cinema Center. Its executive director, David Banuchyan, is also listed on the website of production-services outfit People of Ar LLC as co-producer and “tax rebate supervisor” and is credited there with having “played a crucial role in creating film laws and cash rebate programs.” In effect, the man who drafted the incentive now decides who receives it, while holding an active position in a firm that intends to use it.

That alignment is not accidental. Sixteen months before the CFA existed, the Ministry of Education, Science, Culture and Sport, several parliamentarians, the National Cinema Center and People of Ar signed a four-party memorandum of understanding pledging to secure rebate support for three English-language features involving German actor-director Til Schweiger. The document, dated 18 December 2023, promised cooperation on “all necessary sub-legislative acts” long before those acts were drafted.

Promises to Netflix, silence from Netflix

In selling the programme ministers have repeatedly cited an imminent “Netflix series” as evidence that the rebate is working. No such project appears in Netflix’s public newsrooms, investor filings or trade-press databases as of 30 May. The streaming platform declines to comment on productions that are not formally announced, but the absence of any reference after more than a year raises doubts about the government’s headline claim.

Potential fallout

Civil-society groups in Yerevan have filed complaints with the Corruption Prevention Commission and are preparing a constitutional petition aimed at suspending Decision 412-N. If the decree is struck down, the CFA would have no legal basis to reimburse foreign producers, leaving applicants in limbo. Even if the decree survives, any production company linked to foundation staff could face a conflict-of-interest investigation.

For international producers courted by the 35 percent headline figure, the message is unchanged: Armenia’s landscapes and crews may be attractive, but until the rebate’s legal footing and governance are secured, the scheme carries a risk premium that producers will have to price in.

Different Country, Same Story

From Tel Aviv to Mexico City, and now to Yerevan, Film Industry Watch keeps seeing the same playbook: a pot of public money meant to nurture filmmaking is ring-fenced by a tight circle of insiders who write the rules to suit themselves and then police their own compliance. Wherever public money is poured into filmmaking, we keep finding the same closed loop: insiders draft the rules, sit on the selection panels, and ultimately benefit from the very funds they oversee. In Greece, our September 2024 investigation revealed how senior figures at the Greek Film Center approved grants for films in which they themselves held stakes. In Israel, we traced a revolving door between the country’s two largest public film funds and private production companies, with executives switching seats while deals stayed in the family. In North Macedonia, whistle-blower director Milcho Manchevski documented what he called a “film-mafia” network inside the National Film Agency that sidelined outsiders. And in Ukraine, we showed how a million-dollar Netflix donation fell under the control of the same academy officials tasked with distributing it fairly. Armenia’s cash-rebate controversy follows the identical pattern: public money placed under the watch of a tight circle determined to guard both the purse strings and the keys to the door.

Film Industry Watch thanks the whistle-blower who supplied the documents behind this investigation. If you have credible information about how public film funds are being misused in your own country, contact us here.