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UPDATE: MPAA, China Resolve Payment Dispute

Pact ends months-long standoff between U.S. and China

After months of haggling, Hollywood will finally be getting paid for its films released in China.

“We are pleased to hear that the Chinese government has addressed the matter and all money due will be paid in full,” MPAA topper Chris Dodd said in a statement announcing the news on Tuesday. “It is our understanding that the payment process has recommenced.”

The dispute centered around a 2% hike in China’s value added tax that violated a 2012 WTO agreement entitling foreign studios to 25% of the revenue for films released in China. Some studios had declined payments at a lower rate, creating a months-long standoff between the MPAA, U.S. and Chinese officials.

With hundreds of millions of dollars at stake, the MPAA had worked closely with the US trade representative’s office to resolve the issue, which has affected Hollywood since late last year. Films affected by the dispute included 20th Century Fox’s “Life of Pi” and “A Good Day to Die Hard,” as well as Sony’s “Skyfall.”

Unclear is just HOW the U.S. and the China Film Group, China’s largest film distributor, have resolved the issue. It is not certain whether CFG will simply have to pay the extra 2% tax, or whether it has succeeded in exempting cinema tickets from the new rate of taxation.

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