China Issues New Rules to Stop Movie Stars From Evading Taxes

China Issues New Rules to Stop Movie Stars From Evading Taxes
Mainland Chinese visitors pose beside bronze figures depicting the movie industry at the Avenue of Stars in Hong Kong on May 9, 2012. (Bobby Yip/Reuters)
China will take action to curb tax evasion and control “unreasonable” rates of pay in the film industry, Chinese state-run media Xinhua reported on June 27, citing a notice issued by China’s film and tax regulators.
It said illegal payment practices, including the drawing up of fake contracts in order to falsify income declarations, were driving up film production costs, undermining overall product quality, and damaging China’s film industry, now worth $8.6 billion.
New standards needed to be formulated to cap payments granted to actors, with salaries not permitted to exceed 40 percent of total production costs, it said. Payments to stars should amount to no more than 70 percent of total wage costs.
The notice was issued in response to a scandal that erupted a month ago, when Cui Yongyuan, a well-known TV talk show host, accused Fan Bingbing, a famous Chinese film actress, of hiding her true income with fake contracts.
The incident revealed a widespread tax evasion scheme in China’s film industry, leading the authorities to quickly take action.
China said earlier this month that it would launch investigations into tax evasion in the country’s film and television industry after a series of famous names were accused of signing fake contracts.
The notice was issued jointly by China’s tax regulators, as well as the country’s Central Publicity Department, the Ministry of Culture and Tourism, and the State Administration of Taxation.
On Sina Weibo, China’s equivalent of Twitter, some netizens have questioned what the notice could really accomplish.
“Why wasn’t the notice jointly issued by the security bureau, the country’s top prosecutor’s office, and the anti-corruption agency? I feel like [the authorities] are only going through a formality to appease people’s anger,” wrote a netizen from southern China’s Yunnan Province.
By David Stanway and Wang Jing. Epoch Times staff member Frank Fang contributed to this report.