Star studios are now canceling the tide of "tax avoidance" or "migration"?

  There was Fan Bingbing before and Zheng Shuang afterwards; from Horgos to Hainan and Jiangsu.

A large number of celebrities register companies, and then get together to cancel, like a cycle.

This cycle has occurred twice.

  Since April 2021, artist and celebrity brokerage studios have once again started the "deregistration wave". In June alone, the number of deregistrations exceeded 100. On average, at least 3 companies were deregistered every day.

  A film and television law practitioner told the Red Star Capital Bureau that artists set up studios on the one hand to make performing arts activities more convenient, on the other hand, to "tax avoidance."

  In the face of celebrities' tax evasion of hundreds of millions of yuan, how can the taxation of celebrities be dealt with?

  Star Studios are now "logging off tide"

  This year, more than 660 artist broker-related companies have been cancelled

  In April 2021, artist Zheng Shuang was investigated by the Shanghai Taxation Bureau for suspected tax evasion.

  On August 27, the State Administration of Taxation and the Shanghai Municipal Taxation Bureau announced that Zheng Shuang’s tax evasion and evasion cases were severely investigated in accordance with the law, and Zheng Shuang’s tax collection, late fees and fines totaling 299 million yuan were imposed.

The State Administration of Taxation also stated that it will severely investigate and expose various malicious tax evasion and further standardize the taxation order of the film and television industry.

  After that, the Central Propaganda Department also issued the "Notice on Carrying out Comprehensive Management Work in the Cultural and Entertainment Field", requiring strict investigation and punishment of tax evasion and effective maintenance of market order.

  It is not difficult to see that the entertainment industry is facing "the strongest tax regulation."

And some celebrities in the entertainment industry have already heard the news and got together to log off companies under their own names.

  During the investigation, Zheng Shuang had 4 studios cancelled.

According to the data from Tianyan Check, as of August 31st, more than 660 artist brokerage-related companies have been cancelled this year, as of August 31st, and more than 100 related companies have been cancelled in June alone. On average, there are at least 3 companies every day. Was logged off.

  According to people familiar with the matter, the reason for getting together to cancel companies is because these companies are often created for the purpose of "tax avoidance".

For celebrity filming, if you file a tax return under the category of "individual industrial and commercial households' production and business income", you only need to bear the tax rate of 5%-35%; but if you withhold personal income tax based on personal income, the maximum progressive tax rate is 45%.

On the other hand, the tax base of personal income tax is "income"; the tax base of corporate income tax is "net profit", and costs and expenses can be deducted from the income.

  According to the Economic Information Daily, a person familiar with the matter disclosed that some large-scale celebrity studios or corporate legal persons will "launder" taxable funds into costs by increasing transactions with affiliated companies in order to achieve tax evasion.

  A film and television legal practitioner who did not want to be named told the Red Star Capital Bureau that on the one hand, artists set up studios to facilitate performing arts activities. On the other hand, artists’ registered studios are mostly sole proprietorships. According to relevant regulations, there is no need Pay corporate income tax.

  This wave of star studios "logging off" is already the second time in recent years.

The first time was in 2018. In May of that year, artist Fan Bingbing was exposed to signing a "yin and yang contract" and tax evasion. Since June, there has been a wave of "deregistration" of film and television companies in many places.

At that time, Khorgos, regarded as a "tax depression", was particularly prominent. More than 100 companies were cancelled, including affiliated companies of many well-known celebrities.

At the most exaggerated time, the "Ili Daily" published 25 "Cancellation Announcements" on August 27, 2018.

The star studios that were cancelled this time are mainly concentrated in Zhejiang, Shanghai, Jiangsu and other places.

  Are these companies really cancelled?

  The "logout" from Horgos to Hainan, Jiangsu is actually a "transfer"?

  Judging from the deregistration and registration of enterprises, the "registration wave" has indeed accompanied the "deregistration wave".

  Since 2014, the number of annual registrations and growth rates of my country’s artist brokerage-related companies (all corporate status) has increased dramatically. In 2016, the annual registration growth rate of related companies was as high as 99%. In 2018, the number of new related companies exceeded 3,000, which is a historical increase. The year with the most volume.

Subject to industrial and commercial registration, as of August 27, the number of new artist broker-related companies in my country in 2021 will decrease by 73% year-on-year, but there are still 260 companies.

On the other hand, the number of annual cancellations of related companies has also increased significantly. In 2019 and 2020, more than 1,000 artist broker-related companies have cancelled.

  “It’s not so much a cancellation, it’s a relocation.” An industry insider who did not want to be named revealed to the media that after 2018, a large number of film and television companies and celebrity studios were evacuated from Horgos, Wuxi, Hengdian and other places and moved to other places.

  The same is true for this wave of cancellations.

In the process of company registration and "transfer", cities with tax incentives have become the first choice of celebrities.

In 2018, the reason why Horgos had a "write-off tide" was not only affected by the Fan Bingbing incident, but also for policy reasons.

  In 2010, Horgos became a special economic development zone specially approved by the state for free corporate income tax.

Enterprises in the park can enjoy the preferential "income tax exemption within five years and halving after five years", valid for ten years.

In 2016, Khorgos's preferential policies were once again increased, and newly established enterprises can also enjoy value-added tax and surcharge refunds, which makes the nation's enterprises get together and rush to Khorgos to set off a new climax.

  Starting from the end of 2017, the threshold of the Khorgos tax exemption policy has been raised, companies have been checked, and star studios have left and invested in Hainan, Jiangsu and other places.

  According to the data from Tianyan Check, on August 6, 2021, Riyue Huize (Beijing) Film and Television Culture Co., Ltd., in which actor Pan Yueming was the major shareholder, was cancelled; on August 10, Sanfan Culture (Haikou) Co., Ltd. was established, with the legal representative being Pan Yueming's mother, Tian Runxiang, is jointly held by Pan Yueming and Tian Runxiang, with a shareholding ratio of 90% and 10% respectively.

  According to the preferential policies of Hainan Free Trade Port, in addition to the negative list industries, the entire province and the entire industry can enjoy the preferential corporate income tax rate from 25% to 15%, and the highest marginal personal income tax rate from 45% to 15%.

Since the second half of 2020, Hainan has poured into many film and television and cultural companies. Xu Zheng and Shen Teng have all invested in new companies in Hainan.

According to Tianyan Check, as of now, there are 3497 newly established film and television cultural enterprises in Hainan since 2021.

  In Xinyi, a county-level city in the northern part of Xuzhou City, Jiangsu Province, nearly 1,200 film and television cultural market entities have been registered one after another, including studios of well-known artists.

However, when the Economic Information Daily visited the local area, they found that they were almost all nominal "empty shells."

The reason why "small places" far away from big cities and main urban areas are favored by "big stars" is also the tax policy "depression" created by attracting investment.

  How to deal with the tax-related issues of star artists

  Build a showbiz

  Healthy tax system

  To control the tax-related problems of star artists and eliminate the chaos of tax evasion in the circle, it is necessary to build a healthy taxation system in the entertainment industry.

  In response, the Red Star Capital Bureau interviewed Jia Kang, Director of the Institute of Fiscal Science of the Ministry of Finance. He said: “If a celebrity artist establishes a studio according to law, it is a reasonable behavior.”

  Regarding the phenomenon of local governments attracting celebrity studios to settle in, Jia Kang said that there are some "tax depressions" at home and abroad. Under the premise of legalization, local governments can set some tax incentives to attract enterprises, including artist studios. , As long as it is legal and compliant, it cannot be simply blamed.

  Jia Kang believes that the establishment of a studio by an artist can be a reasonable act under the concept of "tax planning", but if there is an illegal act of tax evasion, it is not allowed.

  In fact, canceling the studio cannot be a shortcut for artists to evade legal liability.

  According to the China-Singapore Jingwei report, Li Min, a senior partner of Shanghai Hansheng Law Firm, said that taking tax evasion as an example, from the perspective of unit crime, as long as the unit does constitute a crime of tax evasion, regardless of whether the unit still exists or has been cancelled, it will be investigated. Criminal liability of personnel.

  "If the purpose of establishing studios and affiliated companies by artists is to evade the payment of personal income tax, then the tax authorities will punish individuals rather than studios or affiliated companies. Therefore, even if the studio is cancelled, it will not affect the individual's accountability. But objectively, the cancellation of the studio will make it more difficult for the tax authorities to investigate the facts.” Li Min said.

  Pan Yan, secretary-general of the China Performance Industry Association, said that from the perspective of industry self-discipline, he hopes to avoid violations of laws and regulations as much as possible.

In daily work, the brokerage agencies, artist studios, and brokerage team practitioners should all raise their legal awareness and strengthen management.

  The People’s Court newspaper also pointed out that to eliminate the “hidden rules” of tax evasion within the circle, on the one hand, the taxation criminal law network is woven and strictly in accordance with the provisions of the Supreme People’s Procuratorate and the Ministry of Public Security’s filing standards for tax-related crimes, even if taxpayers or withholding obligations If a person pays taxes, pays late fees, or accepts administrative penalties after filing a case with the public security organ, he shall still be investigated for criminal responsibility.

  On the other hand, it is to improve the tax system and related supporting measures, build a comprehensive legal and taxation system, for high-income groups such as entertainers, as the focus of tax audits and spot checks, and record tax evasion and tax evasion of celebrities in personal credit reports.

  Chengdu Commercial Daily-Red Star News Reporter Yu Yaoqiang Yaxian

  Intern reporter Tao Yueyang

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