BEIJING/SHANGHAI (Reuters) - China will launch a tax evasion investigation into the country’s film and television industry, the tax bureau said in a statement posted on its official website on Sunday.
Some of the country’s most famous actors have been accused of signing so called “yin-yang” contracts - one contract setting out agreed payment terms and a second one with a lower figure for the tax authorities to avoid payment of tax.
China’s cinema market is worth $8.6 billion.
An index tracking major media firms dropped 1.3 percent to a near four-year low on Monday.
The State Administration of Taxation (SAT) has asked local bureaux in the southern province of Jiangsu, among others, to carry out investigations.
“If violations of tax laws and rules are found, they will be dealt with in accordance with the law,” said the SAT.
The last time a high-profile artist was entangled in a tax investigation was in 2002, when 1980s actress Liu Xiaoqing was imprisoned for a year for tax evasion.
So-called “yin-yang” contract — a widely used expression in China meaning real and fake agreements operating side-by-side — is commonplace across the country for every type of acquisition, from real estate to football clubs.
China has been cracking down on tax cheats as demands grow on the nation’s coffers.
Reporting by Pei Li, Engen Tham and Wang Jing; Editing by Michael Perry