TV, film sectors targeted in tax crackdown

China's tax authority chased down 11.75 billion yuan ($1.73 billion) in unpaid taxes last year from film and TV industry professionals after a campaign investigating tax evasion revealed widespread abuses, said the State Administration of Taxation on Tuesday.

The nationwide campaign, which began in October, is still ongoing. It began a new phase this month by targeting a smaller group of taxpayers in the sector thought to have a higher proclivity for tax evasion activity.

Fines will be reduced for those who come forward and proactively settle unpaid amounts, said an official with the administration.

After the first stage of the investigation, China's tax policies have become better known among entertainment stars and executives, and they will receive lesser fines if they voluntarily offer to pay their proper due, said the official.

Liu Jianwen, a tax expert affiliated with the China Law Society, said that tighter regulations over the film and TV industry's tax payment practices will discourage tax evasion and promote healthy industrial development.

The administration vowed in an earlier notice to that it would improve tax collection rates for the film and TV industry.

The ongoing campaign also targets violations among taxation officials.

In one of the biggest celebrity scandals in 2018, actress Fan Bingbing was fined 883 million yuan ($129 million) for unpaid taxes.

On Oct 3, Fan — listed by Forbes in 2017 as China's highest-paid entertainer — posted an apology on her Weibo social media account two hours after Xinhua News Agency reported the fine, the largest of its kind in recent years.

In October, the administration ordered all film and television professionals to examine their own tax payment responsibilities since 2016 to determine if they were in violation of fiscal requirements.

Those who remitted overdue taxes to authorities before Dec 31 are exempt from administrative punishment and penalties, and those who failed to pay back taxes will be severely punished, according to the administration.

Stars such as Fan have reportedly concealed their real incomes through contract fraud or using the accounts of their studios. Analysts said cracking down on tax payments helps in the healthy development of the film and TV industry over the long run, and celebrities are no longer allowed to use production studio accounts to evade taxes.