China Targets Entertainment Sector Alleged Tax Evaders - Report

Editorial Staff

14 August 2018

Chinese authorities have launched a wide campaign against tax dodgers and offshore currencies by some of the Asian country’s most prominent celebrities, seen as seeking to calm public ire over inequality of wealth, the South China Morning Post reported.

The joint investigation involves the nation’s tax bureau, the foreign-exchange watchdog, financial crime investigators and regulators of the publishing, broadcasting and sports bureaus, the SCMP quoted unnamed sources as saying. Targets include are movie actors and actresses, models, television personalities as well as sports stars.

The task force has been assembled, headed by a vice-ministerial level police official and an expert in the investigation of commercial crimes and money laundering, the report said.

The investigation stemmed from public scrutiny and outcry stirred up by popular TV host Cui Yongyuan, who alerted the public to a practice in China’s entertainment circles to help highly paid celebrities evade tax. This involves “yin-yang contracts” that split remuneration agreements into a copy for tax officials and a private copy for the actor.

As the report said, the top rate in China’s tax code is 45 per cent and high-income earners send their pay to their own studios or production firms, which as small businesses are liable for taxes as low as 6 per cent.