Developing | Studio stocks plunge as tax man’s scrutiny of Fan Bingbing’s fees may uncover actors’ dirty secret

Shares of China’s film studios and movie producers plunged on Monday amid concerns that an investigation into allegations of tax evasion by a top actress could shed light on a long-held practice in the industry and disrupt operations.

Huayi Brothers Media, one of China’s largest studios, plunged by the 10 per cent daily limit to a five-year low of 7.36 yuan on the Shenzhen exchange. Wuhan DDMS Culture, which produces television drama and movies, plunged by 9.8 per cent to 15.27 yuan on the Shanghai exchange, the lowest close since March 29.

At the centre of the storm is Fan Bingbing, the highest-paid celebrity in the Forbes China Celebrity 100 list for four consecutive years, with US$17 million of earnings in 2016. The actress, who played the character Blink in the 2014 X-Men: Days of Future Past, gained attention last week after paying more than 200 million yuan (US$31 million) for a duplex penthouse flat in Shanghai.

China’s X-Men actress Fan Bingbing denies evading taxes

A Chinese television presenter blew the whistle on Fan’s real estate purchase, calling into question the true size of her earnings. Fan allegedly signed two contracts for her films to avoid paying higher tax on her income, the presenter Cui Yongyuan said in a blog.

Fan’s studio denied she had ever signed duplicate contracts to hide her earnings. Still, the tax bureau ordered the Jiangsu provincial office, in which Fan’s studio is based, to begin investigations.

Shares of Zhejiang Talent Television & Film, in which Fan owns a 1.6 per cent stake as the 10th largest shareholder, plunged 10 per cent to 14.85 yuan in Shenzhen, the lowest since March 2015. The slump spilled over to Zhejiang Huace Film & TV, which closed 2.8 per cent lower at 9.92 yuan after earlier retreating by as much as 7.2 per cent in Shenzhen.