Topics of the penalties in tax and fines of more than 4.3 million yuan ($590,000) issued to a D-list Chinese female movie star trended on China's social media platforms on Saturday with many urging the authorities to strengthen tax compliance among celebrities, as insiders suggested that tax dodging among the rich and famous may be more severe than what has already come to light.
According to China's State Taxation Administration, the Chongqing Municipal Tax Service recently ordered 31-year-old Shanghai-born Yuan Bingyan to pay more than 4.3 million yuan in total in individual and company taxes and fines linked to her and associated companies.
After discovering tax-related risks associated with Yuan, the Chongqing tax authority asked her to promptly pay back taxes in addition to issuing her a warning. However, Yuan did not address the issues raised completely. Due to suspicions of tax evasion within Yuan's affiliated enterprises, the tax authorities initiated a full audit in accordance with the law.
After investigation, the Chongqing tax authority found that Yuan did not file her tax for her income in accordance with the law and underpaid on personal income tax. Companies linked to Yuan also committed tax evasion related to her personal income and expenditure.
Considering that Yuan has actively cooperated with authorities, provided information and voluntarily reported tax-related violations which the authorities were not previously aware of, the Chongqing tax authority ordered her to pay 2.97 million yuan personally and 1.32 million yuan for related companies.
Yuan and her related enterprises have since paid the fines and late payment fees as required under regulations.
Following the decision was announced, several local TV broadcasters removed topics related to Yuan. Brands that she was linked to also removed any information about the star.
According to media reports, it was not the first time that Yuan was fined for tax dodging. In July of 2022, one of Yuan's related companies, which has since been deregistered, was fined 978,000 yuan for violations of tax management law.
Many internet users praised the decision, with many netizens wondering why celebrities are still seeking to evade tax even in the face of several high profile instances of tax authorities uncovering tax avoidance schemes.
Fan Bingbing, a A-list Chinese movie star, made the headlines at home and abroad after she was ordered to pay more than 800 million yuan in tax and fines by the country's tax authorities in October 2018.
In December 2021, China's former top livestreamer Huang Wei, nicknamed Viya, was slapped with a massive fine of 1.34 billion yuan for dodging taxes by authorities in Hangzhou, East China's Zhejiang Province.
These A-list celebrities, along with many leading and minor stars and marketing influencers who have been punished for their tax dodging behaviors have frequently sounded the alarm over unregulated practices.
However, despite the public exposure, there are still celebrities attempting to defy the law, which some netizens and experts attributed the root cause to the unreasonable income distributions in these industries.
According to Guo Zhiguo, a lawyer and partner from Beijing-based law firm Dongfang Law Offices, the particularly high profits generated in the acting profession has led to an increased instance of tax avoidance.
Some netizens commented that it is unbelievable that Yuan, who is only considered a minor star, was able to dodge 4 million yuan in taxes owed, and that she was brazen enough to initially fail to address warnings issued by the local tax bureau.
An entertainment industry insider told Jiupai News that cases of celebrities using various means, such as related enterprises, to exploit legal loopholes and evade taxes are not rare and the actual amount of taxes evaded by celebrities may very likely be much higher than what has been publicly disclosed.
Guo also noted that loopholes remain in the country's tax supervision system.
China's amended Criminal Law has lowered the risk for tax dodgers since first time tax evaders can avoid prison sentence as long as they fully pay back taxes owed, overdue fines and penalties, Guo noted.
Guo also pointed out that taxation authorities should step up crackdowns on tax evasion by not only targeting celebrities, but also other individuals and companies who help them avoid tax. Observes noted that current law enforcement in this area requires further strengthening.