China Film Industry Pays $1.73B In Back Taxes Amid Post-Scandal Crackdown

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After implementing a crackdown on tax evasion last October, China’s tax authority has collected RMB 11.75B ($1.73B) from film and television industry professionals, the State Administration of Taxation said on Tuesday. The campaign is ongoing and will now enter a new phase of supervision and correction.

The program began in October following the scandal that engulfed superstar actress Fan Bingbing who disappeared from public view amid rumors of tax evasion. She resurfaced months later with a mea culpa and a hefty fine. In the wake of her woes, tax havens have been closed, regulators are keeping a keen eye on film companies, and a fear of audits has led to a production slowdown.

The initial October notice demanded that all levels of taxation authorities inform film and TV companies and relevant personnel with significant casting fees to conduct self-audits. Producers, agencies, performing arts companies, star studios and other high-income employees were told to update their filings from 2016. Those who paid back taxes before the end of December are exempt from administrative punishment and will not be fined.

The next phase will include targeted warnings to a small number of taxpayers who are not in compliance with the self-examination phase and have high tax risks. Those who settle their accounts after the reminder are expected to receive reduced fines.

The State Administration said the standardization work “has achieved good results,” Xinhua reported. Yan Shaofei, secretary-general of the China Film Association, said the order “effectively addressed the outstanding problems of the film and television industry, supplemented the development shortcomings, resolved the industry risks, educated the employees, and created more favorable environment and conditions for the sustainable and healthy development of the industry.”

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