BEIJING (CHINA DAILY/ASIA NEWS NETWORK) - China's tax authorities reminded film-makers, television production companies and related sectors, as well as those in high-income brackets, to look closely into their own taxpaying practices before Dec 31.
Those who make remedial payments to the tax authorities for unpaid taxes will be exempt from administrative punishment and penalties, Xinhua reported on Monday (Oct 8), citing a statement released by the State Administration of Taxation on Oct 2.
The industry-wide tax probe came after actress Fan Bingbing and companies she represents were ordered to pay taxes and penalties totalling around 884 million yuan (S$177 million) after it was found she had evaded taxes of more than 140 million yuan.
Shi Zhengwen, a professor at the Chinese University of Political Science and Law, said the financial penalty for Fan was rather heavy. Shi said he hopes Fan's case will send a clear warning to those who commit similar infractions.
The administration earlier ordered local tax authorities to carry out a "steady and stepwise" approach to conduct investigations into possible tax evasion among those involved in film and TV production, with the aim being to ensure the entertainment industry's healthy growth.
Behind the use of contract fraud to hide incomes are the overpriced appearance fees of famous performers.
"The excessive bidding wars for some of the biggest stars have exerted a negative impact on the sustainable development of the industry," said Bian Yunlu, a lecturer at Shandong Normal University's School of Journalism and Communication.
Bian said the industry should control vicious competition among performers and drive their payments down to "reasonable levels".
In June, central authorities issued a notice stating performers' pay must not exceed 40 per cent of a production's total cost, and pay to leading cast members must be capped at 70 per cent of total cast payments.
The percentages apply not only to film production but also television and audiovisual programs available on the internet, according to the notice.
The scandal surrounding Fan surfaced in May when former TV host Cui Yongyuan exposed on his social media what he said were two different contracts－one declared, one secret－to hide a massive payment.
Investigators found that Fan had evaded paying about 7.3 million yuan in personal income tax and business taxes during her work on the Chinese-produced film The Bombing.
Several taxation officers in Jiangsu province who were held accountable for the tax evasion were punished, Xinhua News Agency reported, citing the local tax branch.