China’s tax authorities have launched an investigation into allegations that show business celebrities are evading taxes by using a fraudulent dual-contract system.
The State Administration of Taxation (SAT) said on Sunday it has ordered its local bureau in eastern Jiangsu province to investigate “the tax evasion issue by certain film and television professionals as alleged in online discussions”.
Anyone found to have broken the law will be punished, it said.
Chinese film studios and production companies saw their share prices plunge on Monday in response to the news.
The announcement by the SAT came after a row erupted between actress Fan Bingbing and well-known television presenter Cui Yongyuan.
Fan’s film studio, who had a small role in the 2014 Hollywood blockbuster X-Men: Days of Future Past, is based in Jiangsu.
The 36-year-old is currently shooting a sequel to the 2002 film, Cell Phone, which tells the story of a famous talk show host. Cui publicly criticised the film for what he said were similarities between the experiences of the central character and his own life.
Last week, Cui published an image of a document on his verified social media account that he claimed was a contract for a job for which Fan would be paid 10 million yuan (US$1.6 million). Although most of the document was blurred out, the actress’s name could be seen.
Cui also posted an image of what appeared to be another contract, no details of which could be seen, but which he claimed was linked to the first and had a value of 60 million yuan.
He did not name Fan in the second post, but some internet users and media outlets jumped to their own conclusions.
However, in footage released by news portal Pearvideo.com on Monday, Cui said the two documents he posted online were not about Fan, but insisted dual contracts did exist in show business.
“I am not making a clarification. I can say again that I have a drawer of contracts. The government should step up regulations on show business,” he said.
He also told China National Radio that the authorities had contacted him and he would provide the documents and information to help with their investigation.
Cui did not respond to the South China Morning Post’s requests for comment.
On Wednesday, Fan’s studio accused Cui of disclosing commercial contracts and suggesting that Fan had been involved in dual-contract fraud. It also threatened a defamation suit against anyone who made such allegations.
On Saturday, Beijing Daily joined the fray, saying in a commentary that the authorities should look closely into celebrities’ tax payments.
“Should the relevant authorities not check the drawer of contracts mentioned by Cui and keep the public informed? If dual contracts are open secrets in show business, shouldn’t there be a severe crackdown on such large-scale tax evasion,” it said.
On Sunday, Fan’s studio issued a statement denying she had ever signed separate contracts for a single job.
“The studio and Fan Bingbing will fully cooperate with the relevant authorities. We hope the investigation result can be released soon to address the doubts of the public,” a studio executive was quoted as saying on Sina.com.
Shares in Huayi Brothers Media – one of China’s biggest studios and the producer of Cell Phone 2 – fell 10 per cent, the maximum allowed in a single day’s trade.
Shares in Wuhan DDMS Culture, which also produces films and television dramas, fell by 9.8 per cent on the day.
China’s state media have called for an independent inquiry into the dual contract allegations.
“There should be an impartial investigation into whether some film and television professionals have signed two contracts for one job to evade tax,” People’s Daily said on its official Weibo account.
“Everyone stands equal in the law and nobody, no matter how famous … how well connected they are, enjoys extrajudicial privileges.”
A commentary by state broadcaster CCTV said: “Some high earners have room to manipulate [tax payments] because their incomes come from different channels. This is not entertainment news. We don’t care about personal feuds between celebrities, but social justice and authority of the law.”
Forbes listed Fan as the world’s fifth-highest paid actress in 2016, with earnings of US$17 million.
This article China’s X-Men actress Fan Bingbing denies tax evasion as inquiry launched first appeared on South China Morning Post