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Chinese Stars Rush to Pay Taxes in Biz Crackdown

Hong Kong pop queen Faye Wong, mainland Chinese actress Zhao Wei and Taiwan’s Shu Qi are believed to be among the celebrities from around greater China who are now rushing to ensure their finances are on the right side of the law in the Middle Kingdom.

Their haste has been triggered by the recently announced punishment of superstar Fan Bingbing for tax evasion, and by the Chinese government’s campaign to make public examples of misbehaving celebrities.

Tax officials Wednesday revealed that Fan, star of Hollywood’s “X-Men: Days of Future Past” and recent Chinese hit “I Am Not Madame Bovary,” could be liable for up to $129 million (RMB 883 million) in back taxes, late payment penalties and fines.

The hefty penalty imposed on China’s most famous actress – who was reportedly detained and questioned by authorities for months – signals the beginning of an aggressive crackdown on the country’s booming entertainment business, as celebrities have been warned to sort out their unpaid taxes by the end of this year. State news agency Xinhua reported that entertainment companies and workers who pay their taxes by Dec. 31, 2018, will not be penalized. Those who do not face legal consequences.

Chinese media reported that authorities are especially targeting 200 celebrities who are paid more than $1.5 million (RMB 10 million) for each acting job. The names are believed to derive from a list compiled by talk show host Cui Yongyuan, who earlier this year exposed the “yin-yang contracts” – two different contracts for the same job, only one to be submitted to tax officials – that Fan allegedly signed for appearing in Feng Xiaogang’s “Cell Phone 2.”

That revelation triggered the official investigation into Fan and the wider industry. Cui said in July that he had compiled a list of 585 actors and crew members who worked on Huayi Brothers projects and that he had handed the file to tax authorities. “We believe that they are all involved in tax evasion,” he wrote on microblogging site Weibo.

The names of celebrities suspected to be on the list have been widely circulated in the Chinese media, including some Taiwanese actors such as Eddie Peng and Wallace Huo.

Authorities are also investigating stars who might have breached official caps on performers’ pay. Guidelines on salary limits were issued in September of last year, but have not been strictly enforced. Two months ago, however, dozens of leading Chinese television producers signed an agreement to limit actors’ fees. Performers can earn up to $145,000 (RMB 1 million) per episode, with a limit of $7.25 million (RMB 50 million) per season.

Chinese media have reported that pop queen Wong, Zhao and Shu have been paid more than the allowed maximum for their appearance on reality TV shows. Reports say that the three stars must each return between $7.25 million (RMB 50 million) and $13 million (RMB90 million) of their salaries to meet the requirement. The performers’ representatives could not be reached for comment.

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