In the wake of the scandal that recently engulfed superstar actress Fan Bingbing, China has launched a campaign to regulate the payment of taxes within the film and TV industry. A notice posted by the State Administration of Taxation aims to promote the healthy development of the business which has been suspected of shady practices.
The notice demands that beginning tomorrow, 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 must comply with the new rules for tax returns dating back to 2016. “Any film and television enterprises and employees who carefully check and correct their own taxes and take the initiative to pay taxes before the end of December 2018 are exempt from administrative punishment and will not be fined,” the tax board said.
Taxpayers “who have self-corrected after being reminded by the tax authorities may be given lighter or less administrative punishment according to law; if the illegal circumstances are minor, they may be exempted from administrative punishment.”
The tax authority notes that it carried out “key inspections on individual film and television industry enterprises and employees who refused to correct them, and dealt with them seriously according to law.”
The new regs follow the high-profile disappearance of Fan who went AWOL in June amid rumors of tax evasion and casting a shadow over her upcoming projects. Last week, she resurfaced, facing a massive government fine and apologizing for evading taxes, accepting the fine and saying she was sorry to “society, my friends, the public, and the countrys tax authority.”
The Tax Administrations notice released yesterday cites the rapid development of the industry as a “good trend,” but says it has also “exposed the problems of sky-high price, yin-yang contracts and tax evasion, which undermined social fairness and justice, damaged the image of the industry and affected the healthy development of the industry.” Among other things, it is “necessary to… effectively correct the problems in the taxation of the film and television industry, enhance the awareness of film and television practitioners in paying taxes according to law and further improve tax management measures.”
The board is looking at establishing a long-term mechanism for taxation management and to improve the internal tax control mechanism to effectively prevent and resolve the risk of tax enforcement.