China To Crack Down On Fraudulent Box Office Reporting With New Ticketing System

China’s State Administration of Press, Publication, Radio, Film and Television is getting tough with cinema operators. The authority outlined new measures this week designed to prevent movie theater managers from manipulating box office figures and defrauding the government and rights holders. According to FilmBizAsia, SAPPRFT’s memo on the matter, aka “A Notification Regarding the Strengthening of Film Ticketing System’s Management Practices,” is the first major revision of regulations in the sector since 2005. It’s widely said that theaters hide income from the government which takes a 3% value-added tax on revenues as well as a 5% film fund tax. Local distributors usually have a 42% revenue share with exhibitors, and U.S. studios are entitled to receive 25% of the share. China’s reported box office in 2013 was $3.6B, but the state-controlled Xinhua news agency says industry experts believe the real figure is at least 10% higher. FBA says that insiders have claimed as much as $826M, or 18.7%, of box office sales was not reported last year.

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