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Film and television companies flee Horgos amid tax clean-up

(CRI Online)    07:44, October 10, 2018

A group of film and television companies are shutting their operations in the city of Horgos in Xinjiang amid China's tighter scrutiny of tax payments in the sector and the tax evasion scandal involving leading actress Fan Bingbing.

Data from local media outlet Yili Daily shows that since June over 100 film and television companies have filed applications to close their operations in Horgos. This follows a push by regulators to step up oversight of tax payments in the sector, and to control what they consider unreasonable rates of pay in the industry.

Among those fleeing Horgos are many well-known celebrities who are legal persons or stakeholders of production companies.

Horgos: Special economic zone or tax haven?

Located in northwest China's Xinjiang Uygur Autonomous Region, Horgos is near China's border with Kazakhstan. The city was designated as a Special Economic Zone in 2010. Since then, the central government has bestowed a number of tax breaks and preferential policies on companies in the region, such as a five-year company tax holiday, followed by a further five-year 50 percent discount. The aim of providing these subsidies was to drive economic growth in the city, which is a link between China and Central Asia.

The preferential policies attracted many companies and talents to the city, including more than 1,600 media companies that registered in Horgos. But at least 80 percent of domestic film and television companies that registered in Horgos don't have a meaningful presence in the city, according to a report published by

Starting from January, the local tax regulator has been tightening the rules around the preferential tax policies. This includes demanding that companies have business entity, physical presence, and staff in Horgos, and that 20 percent of any income tax exemption be invested locally.

Fan's tax scandal followed by stricter regulations

In June, well-known Chinese actress Fan Bingbing was accused of using what are known as "yin-yang" dual contracts to hide some of her income in order to minimize her tax liability. She was later found guilty of tax evasion and ordered to pay over 880 million yuan in fines (128 million U.S. dollars). Following this scandal, China's tax authorities kicked off a campaign to better regulate and supervise tax payments in the film and television industry.

According to a notice from the State Administration of Taxation last week, starting from October 10, all film and television companies, and industry personnel with very high casting fees, should audit the tax payments they have made since 2016. If there are any unpaid taxes, payment must be made before December 31.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Liang Jun, Bianji)

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