China’s most famous and best paid actress, Fan Bingbing, has reemerged into the world’s spotlight – after a mystery disappearance from
Hollywood – to confess to tax evasion.
Fan will have to pay a 479 million Chinese yuan ($97 million) fine to tax authorities, but will avoid a criminal investigation and possible jail if she pays up. “core socialist values” and frowns on ostentatious displays of wealth. Officials have also launched an investigation into the use of double contracts in the entertainment industry, where only the one of lower value is declared to tax authorities. Fan admitted to the practice.
Within hours, her apology had been re-posted more than 100,000 times and received nearly 500,000 “likes.” Fans generally agreed with the authorities but also declared their love and support for the actress.
She also paid tribute to the Communist Party: “Without the Party and country’s excellent policies, without the love of the general public, there is no Fan Bingbing.” The full apology letter pasted below:
Recently I have endured an unprecedented amount of pain, undergoing deep self-reflection and introspection. I feel ashamed and guilty for what I did, and here, I offer my sincere apology to everyone.
For a long period of time, I did not uphold the responsibility of safeguarding the interests of my country and our society against my personal interests. I feel ashamed that I committed tax evasion in “Unbreakable Spirit” and other projects by taking advantage of “split contracts.” Throughout these days of my cooperation with the taxation authorities’ investigation of my accounts as well as my company’s, I have realized that, as a public figure, I should’ve observed the law, setting a good example for society and the industry. I shouldn’t have lost my ability to govern myself in the face of economic interests, leading myself to break the law. Here I sincerely apologize to society, friends who care about me, the public and the taxation authorities.
I completely accept the penalties given by the taxation authorities after their thorough investigation. I will follow the final order given by the
taxation authorities and will do my best to raise funds to pay back the taxes and fines.
I have been an art lover since I was a child, and I’m also fortunate to have run into the rise of the film and television industries. Thanks to guidance from veterans as well as love from the audience, together with my own hard work, I have achieved a bit of success in my career. As an actor, I take pride in showcasing our country’s culture on the global stage, and I do my best to be in the forefront of this. My success owes to the support from my country and the people. Without the great policies of the [Communist] Party and the country, without the love of the people, there would be no Fan Bingbing.
Today I’m facing enormous fears and worries over the mistakes I made! I have failed the country, society’s support and trust, and the love of my devoted fans! I offer my sincere apology here once again! I beg for everyone’s forgiveness!
I believe that, after this incident, I will uphold the law and respect orders, as well as taking my responsibilities. While I will continue to produce great work for everyone, I will keep a close eye on my company’s management to ensure that my company abides by the law, building it into a great company that is cultured and has high integrity, in order to spread positive energy to society!
Again, I apologize to society and my devoted fans, as well as to my friends and family who care about me. I sincerely say: I am sorry!
October 3 2018
Cui Yongyuan: Well, This Is Not what I Expected
It all began in May when TV presenter Cui Yongyuan posted screenshots on the social media service Weibo of what appeared to be Fan’s employment contract for an upcoming sequel to the very successful 2003 film Cell Phone. It stated she would earn 10 million yuan ($1.4 million), have two luxury cars and a daily food allowance of 1,500 yuan ($215). Cui used the caption, “Don’t bother acting, you really suck!”
The next day, he posted again, suggesting that Fan was being paid through two different contracts for the movie: one for 10 million yuan and another for 50 million yuan ($7.2 million). Only the first contract would be disclosed to tax authorities, while the second was kept secret so that Fan could avoid paying taxes on it, a common practice known as a “yin-yang contract.” He also stated that the actress only had to work for four days for the combined 60 million yuan.
Fan’s studio responded by threatening to sue Cui for libel. Bizarrely, Cui later apologized for attacking Fan and said in an interview with local media that the two contracts he shared had nothing to do with her, but rather a “gang” of other people who had been involved in drafting them. When Fan was fined in October, however, he encouraged people to boycott Air Strike. He was also able to pocket 100,000 yuan ($14,393) as a whistleblower’s fee for exposing Fan.
In his latest post, Cui also accused Chinese film studio Huayi Brothers Media Corp of using spurious contracts help actors evade tax. The company denied all the allegations saying that all of its contracts were drawn up in accordance with the law.
Now Everybody Pay the Bills in Full
In a notice, the State Administration of Taxation said individuals and companies in the entertainment industry must pay any taxes owing for the last two years. The tax bureau said those who paid their bills by the end of the year would be exempted from any penalties.
It also said it would reduce the penalties for those who paid the taxes they owed by the end of February. The authority will carry out audits and issue bills to tax evaders over the next four months. Separately, five senior tax officials in Wuxi were warned, reprimanded or lost their jobs on Monday for mismanagement over the Fan case, according to the official Xinhua News Agency.
Fan’s punishment has sent a warning to the country’s entertainment business, where split contracts – one setting out the real payment terms and a second showing a lower figure for the authorities – are commonly used to dodge tax.
In June, Chinese tax authorities announced new rules for the film industry, curbing the ability of top actors like Fan to acquire immense wealth. Actors would no longer be allowed to earn more than 70 percent of the cast’s wages combined, or more than 40 percent of production costs. Although Fan wasn’t mentioned in the announcement, the tax authorities criticized the film industry for “fostering money worship” and allowing young people to “blindly chase celebrities.” The timing and the wording of the announcement indicated that Fan was being targeted because she had amassed too much wealth and influence.
As the whistle blower Cui Yongyuan did not aim to expose the tax evasion methods that Fan adopts in the first place, he did indirectly revolutionize the whole entertainment industry in China. As the best paid actress Fan was caught, it sends a signal to her fellow celebrities that the good old tax-free days have gone.
Content edited from South China Morning Post, Sydney Morning Herald,Variety.com, The Verge, Shannon Liao