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China's film industry is paralysed and a $ 1.7-bn tax demand is the reason

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China's film industry is paralysed and a $ 1.7-bn tax demand is the reason

Postby MrFredPFL » Wed Feb 13, 2019 10:22 pm

Story :

One day last July, Fan Bingbing, China’s highest-paid movie star, seemed to vanished from the face of the earth. Her disappearance occurred around the time the government opened an investigation into Chinese film industry tax practices. Both her fans and film executives feared the worst. But in October Fan reappeared as mysteriously as she had vanished. She made a public apology to her fans and agreed to pay more than $100 million in back taxes.

The 37-year-old Fan’s public humiliation unleashed a deep chill in an industry that until recently had been humming along. Every week brought fresh reports of stars and companies under scrutiny. Industry tycoons coughed up a stunning $1.7 billion in back taxes after the government urged them to engage in “self-examination and self-correction.” That, in turn, has prompted a flurry of TV and movie cancellations and even the liquidation of entire companies.

“Some of the biggest stars and directors are being looked at very closely,” says Albert Lee, a former executive at Hong Kong-based Emperor Motion Pictures. “That makes people very, very nervous.”There have been faint attempts to push back at what many see as unfairly tarnishing an entire industry. In December, a group of prominent directors published a letter accusing the government of forcing law-abiding filmmakers to pay for the sins of a few. “We express greatest anger toward some unfair public opinions that stigmatize the entire industry,” the China Film Directors' Guild wrote.

For the most part, though, movie people have gone into hiding. Production companies cancelled or postponed projects while they audit their books and negotiate what they owe in back taxes. Many of the country's biggest actors stopped working, afraid of becoming the next Fan Bingbing. Financing dried up as banks shied away from an industry tainted by scandal.The crisis has exposed the shortcomings of China’s efforts to build an entertainment industry to rival Hollywood. The government views its domestic film business as an instrument of soft power, influencing how citizens view the country while curbing the influence of outsiders. Where the state once distributed propaganda movies and banned all Western cinema, in recent years the approach has been more sophisticated and ambitious: massive subsidies and state-sponsored bank loans to produce movies, open theatres and build new theme parks.

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