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Chinese Stars, Entertainment Companies Pay $1.7 Billion in Back Taxes

Chinese film and TV stars and entertainment companies have forked over an additional $1.7 billion (RMB11.7 billion) in taxes in the wake of last summer’s scandal surrounding actress Fan Bingbing and a subsequent government crackdown. The figure was announced late Tuesday by China’s State Tax Administration.

Chinese authorities launched a probe into the tax affairs of the entertainment sector last October. Companies and individuals were asked to examine and, if necessary, correct their post-2016 tax payments by the end of December. Those who complied would be exempt from penalties for tax evasion, the tax administration said.

In July last year, Fan was accused of hiding a proportion of her income from a film production through the use of multiple contracts, only some of which were declared to the tax authorities. It also emerged that she had set up companies in various Chinese provinces that offered lower tax regimes.

In October, after vanishing from public view for months, Fan resurfaced. She apologized and was ordered to pay $130 million (RMB884 million) in back taxes and penalties on behalf of herself and her companies.

The huge amount collected from other stars and entertainment firms – the figure is roughly equal to 20% of China’s gross box office last year – reinforces the argument that the use of double contracts and tax loopholes was widespread throughout the Chinese industry. The number of productions initiated in China slowed sharply from last summer as production companies and talent reassessed their financial situation and relationships.

“Industry workers should practice socialist core values…and strive to be entertainment workers with belief, empathy and sense of responsibility in the new era,” authorities said, according to state news agency Xinhua.

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