China’s State Tax Administration has announced that around $1.73 billion in additional taxes have been paid out by Chinese film and TV stars in the wake of the scandal around actress Fan Bingbing last year.
In July last year, Fan was accused of hiding a portion of her income from film production through the use of multiple contracts and tax loopholes. After vanishing from public view for months, Fan resurfaced in October when she apologized and was ordered to pay $130 million in back taxes and penalties on behalf of herself and her companies.
At the same time, Chinese authorities launched a probe into the tax affairs of the entertainment sector. Companies and individuals were given until the end of December to, if necessary, correct their post-2016 tax payments and if they complied they would be exempt from penalties for tax evasion.
That’s resulted in all this additional tax revenue being paid out – a figure roughly equal to 20% of China’s gross box office last year. In fact, it’s enough that the number of productions initiated in China has now slowed sharply from last summer as production companies and talent reassessed their financial situations.
The State Administration has indicated the initiative has worked and has “achieved good results”.