Minitrue: No Critique of Film Industry Tax Policy

The following censorship instructions, issued to the media by government authorities, have been leaked and distributed online. The name of the issuing body has been omitted to protect the source.

Regarding the tax collection and management policy for the film and television industry, all websites must not report, repost, or comment on critical opinions. (December 1, 2018) [Chinese]

China has tightened its tax collection and management policies for the entertainment industry after Fang Bingbing, one of the country’s highest paid actresses, was penalized for tax evasion in October.  Fan was fined almost $130 million after she underreported her earnings using so-called “yin-yang contracts” to conceal her true income. The Fan Bingbing tax scandal and other celebrity yin-yang contract cases have been the subject of multiple censorship directives. Authorities were ordered as early as July to begin strengthening tax payment regulations in the . From Xinhua:

Companies and personnel in the sector should honestly declare and pay due as required by law, the State Administration of Taxation said in a statement.

Taxpayers in the industry should stick to the actual amount when issuing value-added tax invoices, and must not issue or let others issue invoices of a false amount, the statement said.

Tax authorities will take back the tax rebate from taxpayers if the reduction they received is found to be against the rules, it added.

Local tax departments will improve tax source management in the film sector by coordinating efforts with other government organs, helping taxpayers strengthen their financial system, and improving taxation management based on different levels of risks of companies and personnel.

The administration also asked for strict implementation of tax preference policies and measures to support the healthy development of the film sector through tax management and services, the statement said. [Source]

Tax officials are currently concluding a campaign to recover all unpaid back taxes from industry celebrities with a set deadline of December 31, 2018. Individuals have been asked to re-examine their taxes and make up for incomplete payments dating back to 2016. Vivienne Chow at Variety reports:

The State Administration of Taxation said in a statement released on Monday that beginning on Oct. 10, provincial tax authorities will inform local film and television production companies, talent management agencies, performance companies, studios of individual celebrities, as well as relevant companies and high-earning film and television industry practitioners about the re-examination of their tax returns submitted since 2016. Companies and related industry workers who discover and pay their unpaid taxes upon self-conducted inquiry of their previous tax returns by Dec. 31 will not be penalized, the statement said.

From January to the end of February 2019, tax authorities will target certain companies and industry workers to “further self-correct” their taxes based on their self-conducted re-examination results. Those who are warned to self-correct their taxes at this stage will be penalized, but the level of punishment will vary depending on the situation. Heavy penalties will be applied to those who fail to comply between March and June next year.

Authorities will review the current taxation policies applied on film and television industries and set up a new, effective system by the end of July 2019. [Source]

真Since directives are sometimes communicated orally to journalists and editors, who then leak them online, the wording published here may not be exact. Some instructions are issued by local authorities or to specific sectors, and may not apply universally across China. The date given may indicate when the directive was leaked, rather than when it was issued. CDT does its utmost to verify dates and wording, but also takes precautions to protect the source. See CDT’s collection of Directives from the Ministry of Truth