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A combination photo of Cui Yongyuan (left) and Fan Bingbing.[Photo/IC]

High earners advised time remains to begin remedying any tax lapses


China"s tax authorities reminded filmmakers, television production companies and related sectors, as well as those in high-income brackets, to look closely into their own taxpaying practices before Dec 31.

Those who make remedial payments to tax authorities for unpaid taxes will be exempt from administrative punishment and penalties, Xinhua reported on Monday, citing a statement released by the State Administration of Taxation on Oct 2.

The industrywide tax probe came after actress Fan Bingbing and companies she represents were ordered to pay taxes and penalties totaling around 884 million yuan ($128 million) after it was found she had evaded taxes of more than 140 million yuan.

Shi Zhengwen, a professor at the Chinese University of Political Science and Law, said the financial penalty for Fan was rather heavy. Shi said he hopes Fan"s case will send a clear warning to those who commit similar infractions.

The administration earlier ordered local tax authorities to carry out a "steady and stepwise" approach to conduct investigations into possible tax evasion among those involved in film and TV production, with the aim being to ensure the entertainment industry"s healthy growth.

Behind the use of contract fraud to hide incomes are the overpriced appearance fees of famous performers. "The excessive bidding wars for some of the biggest stars have exerted a negative impact on the sustainable development of the industry," said Bian Yunlu, a lecturer at Shandong Normal University"s School of Journalism and Communication.

Bian said the industry should control vicious competition among performers and drive their payments down to "reasonable levels".

In June, central authorities issued a notice stating performers" pay must not exceed 40 percent of a production"s total cost, and pay to leading cast members must be capped at 70 percent of total cast payments.

The percentages apply not only to film production but also television and audiovisual programs available on the internet, according to the notice.

The scandal surrounding Fan surfaced in May when former TV host Cui Yongyuan exposed on his social media what he said were two different contracts-one declared, one secret-to hide a massive payment.

Investigators found that Fan had evaded paying about 7.3 million yuan in personal income tax and business taxes during her work on the Chinese-produced film The Bombing.

Several taxation officers in Jiangsu province who were held accountable for the tax evasion were punished, Xinhua News Agency reported, citing the local tax branch.

File photo of actress Fan Bingbing. [Photo/VCG]

Chinese starlet"s fines reasonable, experts say


Legal professionals agree that the punishment given to actress Fan Bingbing for tax evasion is reasonable and justified, and can also serve as a warning to the public.

"The tax payment, overdue surcharge and fine for Fan are an administrative punishment that was made in line with our country"s tax collection regulation and the revised Criminal Law," said Chen Canping, president of the law school at Tianjin University of Finance and Economics.

He made the remark on Monday, four days after Fan and companies she represents were ordered to pay taxes and penalties totaling about 884 million yuan ($128 million) after it was found she had evaded taxes of more than 140 million yuan.

As this was Fan"s first such offense, the State Taxation Administration and the tax authority of Jiangsu province decided that she would not be criminally prosecuted if she paid the taxes and fines within a defined time frame.

"This criminal exemption is not an act of extrajudicial mercy. It has legal support," Chen said.

Under the 2009 amendment to the law, tax evaders who receive administrative punishment, including being ordered to pay the required taxes, an overdue surcharge and a fine within the period defined by tax authorities, will be exempted from criminal charges.

But the immunity will be revoked if they incur a penalty from tax authorities twice or more within five years.

"It means there is an administrative pre-procedure for tax evasion offenders in the law, and it is also a second chance for those found evading taxes for the first time," said Liu Jianwen, a law professor specializing in taxes at Peking University.

The experts noted Fan"s punishment is also related to the nation"s attempts to reduce extreme penalties, especially the death penalty, for economic and nonviolent crimes.

For example, capital punishment for crimes involving fraud and counterfeiting was phased out over the past five years, "which is welcomed among many legal professionals and also a trend at home and abroad", Chen said.

Chen Youxi, a lawyer at Capital Equity Legal Group in Zhejiang province, commented on Fan"s punishment on his micro blog. He said tax evasion as a crime is different from theft or smuggling, because the wrongdoers only avoid honoring their civic duty of paying taxes and don"t directly harm others.

"Such a huge tax evasion and the fines levied must be an alert for the public to improve awareness and fulfill obligations to pay their taxes," said Liu Chang, a lawyer at Beijing Zhongwen Law Firm.

Soon after being given the punishment on Wednesday, Fan made a public apology for her wrongdoings via her micro blog, adding she will try her best to raise money to pay her taxes and fines.

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