China tells entertainment industry to sort out their taxes – and pay their bills in full
Tax bureau says those who do so by the end of the year will avoid penalties, as it tightens policies and collection methods
China has asked people working in the entertainment industry to pay any unpaid taxes dating back to 2016, as it tightens tax policies and collection methods in the wake of a scandal involving the country’s highest paid actress.
The announcement on Monday came after Fan Bingbing was told to pay 884 million yuan (US$129 million) in fines and unpaid dues that she avoided by using split, or “yin-yang”, contracts to disguise her true earnings from the tax authorities.
In a notice, the State Administration of Taxation said individuals and companies in the entertainment industry must pay any taxes owing for the last two years.
The tax bureau said those who paid their bills by the end of the year would be exempted from any penalties.
It also said it would reduce the penalties for those who paid the taxes they owed by the end of February. The authority will carry out audits and issue bills to tax evaders over the next four months.
Separately, five senior tax officials in Wuxi were warned, reprimanded or lost their jobs on Monday for mismanagement over the Fan case, according to the official Xinhua News Agency.
Fan’s punishment has sent a warning to the country’s entertainment business, where split contracts – one setting out the real payment terms and a second showing a lower figure for the authorities – are commonly used to dodge tax.
Former CCTV talk show host Cui Yongyuan first accused Fan of tax evasion in May. Those revelations caused outrage on social media and were followed by an investigation, with Fan disappearing from public view for months.
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After she was ordered to pay the taxes and fines, Fan was back to centre stage last Wednesday with a grovelling apology to her fans and the Communist Party.
Sources told the South China Morning Post that the star had been released from “residential surveillance at a designated location” – a form of secret detention – about three weeks ago and returned to Beijing as the tax authorities completed the investigation.
Insiders also told the Post that the tax evasion scandal, coupled with the country’s tighter controls on the entertainment industry, would have a significant impact on locally produced films and television series in the next one or two years as production work has been put on hold.
In her apology letter, Fan said she had “experienced unprecedented pain and agony”.
“I have undergone profound thought and reflection. I feel ashamed and guilty about what I have done, and I sincerely apologise to you all!”
Fan, 37, who gained international fame after appearing in the X-Men and Iron Man film franchises, is the most famous and bankable star to be incriminated under a government crackdown launched in the summer on tax evasion among high-earning celebrities.