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Q: How can China justify foreign film studios forced to pay tax for Chinese companies?

The Value Added Tax (VAT) is calculated on the entire box office revenue. The box office revenue is then divided between the film studio and the compulsory Chinese partner. The total amount of tax for both companies is then deducted from the foreign film studio's share only.


The Chinese partner does not pay their share of the tax. The foreign film studio pays the Chinese company's tax share. In addition, this tax does not apply to Chinese productions, only to foreign productions.



8 years 1 week ago in  Arts & Entertainment - China

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No Chinese media cover this. The latest news about "value added tax"  showed in search result is last year. 


"Value added tax" contributes more than 60% to the total tax income of China's govt. 75% of this tax goes to the central govt and the rest 25% goes to local govts.  Guess that's how some officials buy Ferrari for their kids, send their families overseas and have a billion savings in Swiss banks. 


The problem is China's govt doesn't even need any hearing when it increases tax rate or open a new tax. I wonder maybe it's just several officials come up with a new tax idea during an alcohol and sex party, and the next day it becomes tax law.


Last year Heilongjiang Province claims that the solar energy and wind energy are "state-owned". Last month the State Department issued new rules regarding to second-hand real estate trades, that all those trades will be taxed 20 % of the profits, except in some special cases.  There wasn't any public hearing before the new tax rule is made.


How can a govt even justify itself in modern politics, if it doesn't stand for its people's interests ?  In China's history, too much tax was often the reason for poor peasants to revolt because it's either that or die. However China never learned the lesson from it, never formed a restriction on the govt's power to tax people. At this aspect, China falls far behind England more than 700 years. 

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