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Chinese Actress Fan Bingbing Is Fined Millions for Tax Evasion

UPDATED: Missing Chinese celebrity Fan Bingbing has been hit with colossal fines for tax evasion, it emerged Wednesday, and has accepted blame for financial misdeeds.

China’s State Administration of Taxation said that, following an investigation, the actress is to pay “hundreds of millions” of yuan in back taxes and fines. Calculations according to formulas issued by state news agency Xinhua suggest that Fan and her companies could be liable for a staggering RMB 883 million ($129 million). If she pays in full, she could avoid a criminal trial and inevitable conviction.

Hours after the report was released, Fan – who had disappeared from public view in June – issued an abject apology on Weibo, China’s version of Twitter, admitting to tax evasion and saying she had let down her country and her fans. “Today I’m facing enormous fears and worries over the mistakes I made!” Fan wrote. “I have failed the country, society’s support and trust, and the love of my devoted fans!….I beg for everyone’s forgiveness!”

She said she felt “ashamed and guilty” for letting greed get the better of her, and accepted the authorities’ findings and penalties, adding that she would do her best to raise funds to pay the back taxes and fines. (See full apology here.) However, Fan did not say how she would raise the money, and her participation in projects such as “355,” the all-female action movie produced by Jessica Chastain and unveiled to major buzz in Cannes, is in doubt.

Fan is China’s highest-paid actress and a star of films including “X-Men: Days of Future Past” and “Iron Man 3.” Her troubles began early in the summer after she was accused by another celebrity of tax evasion.

The other celebrity used social media to post copies of two contracts purportedly relating to Fan’s role in the upcoming Huayi Brothers-produced film “Cell Phone 2.” The so-called “yin-yang contracts” were of different values, and the assumed purpose was to declare only the smaller contract to tax authorities. Fan and the production companies denied the accusations.

According to the investigation conducted by China’s State Administration of Taxation and tax authorities in Jiangsu province, where Fan’s company is registered, the actress was paid a total of $4.4 million (RMB 30 million) for her role in “Unbreakable Spirit,” a war action film that also stars Bruce Willis. Of that, only $1.46 million (RMB 10 million) was reported as taxable income. The rest, $2.9 million (RMB 20 million) covered by other contracts, was considered an evasion of personal tax worth $900,000 (RMB 6.18 million) and business taxes of $163,000 (RMB 1.12 million).

The investigation also found out that Fan and a company acting as her legal representative had avoided paying a further $36 million (RMB 248 million) of taxes, of which $19.5 million (RMB 134 million) was considered illegal evasion. The tax authorities ordered Fan and the company to pay back taxes worth $37 million (RMB 255 million), plus $4.8 million (RMB 33 million) in fines.

After Fan’s alleged double contracts were leaked, tax authorities announced in June that they would open an investigation into the tax practices of the entertainment industry. But they did not specify the Fan case and did not acknowledge her whereabouts.

Speculation has been rife for the past three months that Fan was under house arrest, banned from overseas travel, or even in prison. Despite the imposition of the fines, the authorities have so far shed no new light on her liberty or detention status.

Fan and numerous other operators in the entertainment industry are also known to make use of legal tax loopholes, such as setting up subsidiary companies in the western province of Xinjiang or other low-tax regions. While that is not illegal, it could be regarded in China’s tightening political climate as shirking one’s patriotic duty and disrupting social harmony.

Chinese authorities have a track record of punishing celebrities in order to set a high profile example to others.

“When actors become famous, they can profit from their appearances and even words they say. If you are famous and rich but do not take your social responsibilities to pay tax accordingly, it is wrong,” said Lin Yongjian, vice chairman of the China Television Artists Assn.

Fan has been the public face of such brands as Montblanc, Louis Vuitton, De Beers, and fashion house Guerlain. So far, only Montblanc is reported to have severed its connections with her, but she has been conspicuously absent from the other campaigns.

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