Stars: Tax evasion in films topic of probe

The actor denied the allegation and the former TV host later apologized and recanted his insinuation.

Chinese tax authorities launched a nationwide investigation on tax evasion practices in the film and television industries earlier this month.

The exorbitant pay to stars would force a production to cut other costs, such as those for costumes, props and postproduction, harming its quality and bringing a bad influence to the entire industry, said Jiang Yong, a Beijing-based industry analyst.

Double contracts for the same acting work — with one hidden to promise much higher pay and the smaller copy handed to tax regulators — have existed in the industry for several years, said Zheng Xiaoqiang, a Beijing-based lawyer specializing in the sector.

But Zheng added he believes the notice exemplifies the Chinese government’s determination to fight the illegal activities and create a better future for the industry.

A source who insisted on anonymity said some production companies now give stars more titles than just announcing them as performers, as a way to avoid breaking the rules. The stars can “serve” as executive producers or consultants, with these “jobs” to be paid with extra money not included in pay for acting, the source said.

“Giant stars who can bring in a high box office revenue or a high rating are still rare in China, but the market is huge. So it has led production companies or broadcasters to contend for them with high prices,” the source said.