Actress Fan Binging is accused of signing multiple contracts to evade high income taxes. (Reuters: Stephane Mahe)
China will take action to curb tax evasion and control “unreasonable” rates of pay in the film industry, the official Xinhua news agency is reporting, citing a notice issued by China’s film and tax regulators.
- Star salaries will no longer be allowed to exceed 40 per cent of total production costs
- The crackdown was prompted after a row between local stars over “yin-yang contracts”
- Actors are being accused of signing multiple contracts to evade high income taxes
It said illegal payment practices, including the drawing up of fake contracts in order to falsify income declarations, were driving up production costs, undermining overall product quality and damaging China’s film industry, now worth $US8.6 billion.
New standards needed to be formulated to cap payments granted to actors, with salaries not permitted to exceed 40 per cent of total production costs, it said.
Payments to stars should amount to no more than 70 per cent of total wage costs.
The crackdown was prompted after a row erupted between Chinese TV presenter Cui Yongyuan and actress Fan Bingbing.
Cui published Weibo posts with photos of what he said was two contracts for the same job, signed by Fan.
Fan has denied any wrongdoing, but the well-known local practice of signing multiple contracts for the same job — popularly known as “yin-yang contracts”, in which a contract of lower value is the one declared to authorities to avoid taxation — has sparked the state crackdown.
A producer told national Chinese-language daily newspaper Guangming Daily in 2011 that almost every film house would prepare such contracts for the actors, adding that the value difference between the duplicate contracts may be tenfold.
The notice obtained by Xinhua also said measures needed to be taken to rectify the “blind chasing of stars” among Chinese youth, curb the “growing tendency towards money worship” and prevent “the distortion of social values”.
It said “social benefits” should be the biggest priority, and the one-sided pursuit of box office returns, ratings or online clicks should be “firmly opposed”.
Last year, five government agencies issued directives urging media companies to focus on culture rather than celebrity, and moved to rein in runaway paydays for stars.