In an attempt to quash public anger over a yawning income gap, Chinese authorities have begun a coordinated crackdown on tax evasion and offshore currency transfers by some of the country’s most famous celebrities and athletes.
According to a report by South China Morning Post, a task force has been assembled to lead the investigation and will be lead by a vice-ministerial level police official.
iT involves the nation’s tax bureau, foreign-exchange watchdog, financial crime investigators and regulators of publishing, broadcasting and sports bureaus.
In June, popular Chinese TV host Cui Yongyuan blew the whistle on a prevalent practice, called “ying-yang contracts” that allows China’s highest-paid celebrities evade tax.
The coverage resulted in public outcry and calls for the practice to be shutdown.
The top rate in China’s tax code is 45%. However, the South China Morning Post reports that to avoid these taxes, many high-income earners channel their remunerations to their own studios or production houses, which qualify as small businesses, liable for 6% in taxes.
According to official data, China’s film, radio and TV show revenue soared 13% to a combined RMB3.1trn ($448bn, €395bn, £353bn) in 2016, meaning that the government risks missing out on its chunk of a sizeable pie.
