On September 18, 2021, the General Office of the State Administration of Taxation issued the Notice on Strengthening the Tax Administration of Practitioners in the Entertainment Field, requiring further strengthening the tax administration of practitioners in the entertainment field, proposing to further strengthen the daily tax management and taxation of practitioners in the entertainment field (such as star artists, online anchors, etc.), focusing on strengthening the tax administration of celebrity artists, online anchor brokerage companies and brokers and related producers, and further strengthening tax law education and publicity and guidance for practitioners in the entertainment field.
Under the focus of the Propaganda Department of the CPC Central Committee, the State Administration of Taxation and other authorities, the entertainment industry has increasingly become the hardest hit area of tax problems, and many practitioners have received "large fines" one after another.
State Administration of Taxation official**) 1. Celebrity anchors have been inspected and punished one after another - recent cases.
In September 2023, the online anchor Yuan Moumou was charged with taxes, late fees and fines for failing to file tax declarations in accordance with the law and underpaying individual income tax for failing to file tax declarations in accordance with the law, and illegally listing part of the consumption expenditures used for personal consumption in his holding affiliates, underpaying individual income tax, and being charged taxes, late fees and fines, totaling 297380,000 yuan. Its affiliated enterprises have tax-related problems such as underpayment of value-added tax and enterprise income tax in violation of regulations that will be used for personal consumption expenditures, as well as failure to withhold and pay individual income tax, and have been pursued for tax payment, late fees and fines, totaling 132980,000 yuan. In the same month, another network anchor, Wu, underpaid 827 personal income tax for failing to file a tax declaration in accordance with the law910,000 yuan, of which 362 were falsely declared and evaded individual income tax by converting the nature of income180,000 yuan, and was charged taxes, late fees and fines totaling 1,359080,000 yuan. In July 2023, online anchor Wu Moumou underpaid personal income tax 210 for failing to file tax returns in accordance with the law570,000 yuan, and a total of 476 taxes were recovered, late fees were imposed and fines were imposed for a total of 476750,000 yuan;In April 2023, online anchor Yao Moumou evaded personal income tax 236 by means of false declaration30,000 yuan, and a total of 545 yuan was recovered in taxes, late fees and fines80,000 yuan .......
In addition to the emerging online anchor industry in recent years, the traditional performing arts industry has also become the hardest hit area by huge fines: in November 2022, the well-known artist Wu Moumou evaded taxes for using fictitious business to convert the nature of income, and concealing personal income through multiple affiliated enterprises at home and abroad$9.5 billion plus other underpaid taxes of 08.4 billion yuan, which was pursued for taxes, late fees and fines, totaling 60 billion yuan;In October 2018, star Fan Moumou evaded personal income tax of 6.18 million yuan by splitting the contract, underpaid business tax and surcharge 1.12 million yuan, totaling 7.3 million yuan, and his enterprise (including the enterprise serving as the legal representative) underpaid 24.8 billion yuan, including 13.4 billion yuan. For the above illegal acts, Fan Moumou was ordered to pay taxes, late fees, and fines of more than 800 million yuan on time.......
Details of some recent cases:
Case 1: The Seventh Inspection Bureau of the Chongqing Municipal Taxation Bureau dealt with the tax evasion case of Yuan Moumou and his affiliated enterprises in accordance with the law. After Yuan Moumou was reminded, urged to rectify, and interviewed and warned by the Chongqing Municipal Tax Department, the rectification was still incomplete, and his affiliated enterprises were suspected of tax evasion. After investigation, Yuan Moumou obtained part of the labor remuneration and did not file a tax declaration in accordance with the law and underpaid individual income tax;And part of the consumption expenditure used for individuals is illegally disbursed in its holding affiliated enterprises, and the individual income tax is underpaid. Its affiliated enterprises have tax-related problems such as underpayment of value-added tax and enterprise income tax in violation of regulations for personal consumption expenditures, as well as failure to withhold and pay individual income tax. In this regard, in accordance with relevant laws and regulations, the Seventh Inspection Bureau of the Chongqing Municipal Taxation Bureau recovered taxes, imposed late fees and imposed fines on Yuan, totaling 297380,000 yuan. The tax was recovered, late fees were imposed and fines were imposed on its affiliates, totaling 132980,000 yuan.
Case 2: The Third Inspection Bureau of the Guangxi Zhuang Autonomous Region Taxation Bureau dealt with the tax evasion case of online anchor Wu Chuan in accordance with the law. After investigation, Wu obtained income from online live broadcast from 2018 to 2021, and did not file a tax declaration in accordance with the law and underpaid personal income tax 827910,000 yuan, of which 362 were falsely declared and evaded individual income tax by converting the nature of income180,000 yuan. In accordance with relevant laws and regulations, the Third Inspection Bureau of the Guangxi Zhuang Autonomous Region Taxation Bureau pursued Wu's taxes, imposed late fees and imposed fines totaling 1,359080,000 yuan.
2. Why the entertainment industry has become the focus of tax inspection.
1) The general income is relatively high, and the speed of wealth creation is relatively fast.
Whether it is the previous sky-high salary of "2.08 million", or the head network anchor with a daily income of one million or even ten million, the phenomenon reflects that celebrities and network anchors have gradually become a newly rich group in China, and their general income is higher and the income generation rate is faster.
In the context of the prosperity and development of China's cultural and entertainment industry, the public's demand for culture and entertainment is increasing day by day, and a huge cultural and entertainment market has gradually formed. Under the huge demand, the star group can achieve rapid accumulation of income and wealth by increasing performance fees and salaries, and can further obtain income and increase the degree of income through advertising endorsements. In addition, the blowout development of Internet e-commerce has also provided a platform and opportunity for online anchors to generate income at a high speed. Online anchors and brokerage institutions can generate income by charging commissions and other fees, and at the same time increase the rate of ** through short ** platforms, increase their own traffic, and realize traffic monetization. Higher income means higher tax payable and higher compliance costs, however, the tax knowledge of entertainment industry practitioners is usually not as fast as the growth rate of wealth, which also makes tax violations frequent.
2) The cost expenditure and income structure are relatively simple, and a reasonable structure system has not been formed.
Under normal circumstances, although the income of practitioners in the entertainment industry is relatively high, the type of income is relatively simple, the profit corresponding to the income is high, the cost is low, and a comprehensive and reasonable company system has not been established. In the process of tax collection and management, the existence of the above situation makes the possibility of "tax alarm" increase, and the difficulty of tax inspection and inspection is low.
3) Practitioners generally do not know enough about tax knowledge.
There is a specialization in the art industry", and this is especially true in the field of taxation. In the entertainment industry, celebrities and anchors often pay taxes with different types of taxes due to their diversified incomes and rich business types. In addition, due to the strong professionalism and complexity of tax knowledge, celebrities and online anchors usually lack a systematic understanding of tax knowledge, and it is easy to ignore personal and corporate tax issues.
3. Practitioners in the entertainment industry do not pay attention to the consequences of tax compliance.
1) Tax penalties.
Practitioners in the entertainment industry who evade taxes will be subject to administrative penalties such as tax recovery, late fees and fines.
Late fee calculation:
From the date of overdue tax, a late fee of 5/10,000 of the overdue tax will be charged on a daily basis.
Late payment penalty = number of days of late payment of late tax payment and late payment fee plus rate (0.)05%)
Penalty Calculation:
1.A taxpayer who forges, alters, conceals, or destroys account books or accounting vouchers without authorization, or who overlists expenses or omits or understates income in the account books, or refuses to file or makes false tax declarations after being notified by the tax authorities, and fails to pay or underpays the tax payable, is guilty of tax evasion. If a taxpayer evades taxes, the taxation authorities shall impose a fine of not less than 50 percent but not more than five times the amount of tax not paid or underpaid.
2.If a taxpayer or withholding agent fabricates a false basis for tax calculation, the tax authorities shall order it to make corrections within a time limit and impose a fine of not more than 50,000 yuan. If a taxpayer fails to file a tax return and fails to pay or underpays the tax payable, the tax authorities shall impose a fine of not less than 50% but not more than five times the amount of the tax not paid or underpaid.
3.If a taxpayer fails to pay the tax payable and obstructs the tax authorities from recovering the tax arrears by means of transferring or concealing property, the tax authorities shall impose a fine of not less than 50 percent but not more than five times the amount of the tax in arrears.
4.If the withholding agent should withhold the tax that has not been withheld or receivable but has not been collected, the tax authorities shall recover the tax from the taxpayer and impose a fine of not less than 50% but not more than three times the amount of the tax that should be withheld and not withheld or receivable.
2) Criminal responsibility.
In addition, if a taxpayer makes a false tax declaration or fails to file a tax declaration by means of deception or concealment, and evades the payment of tax in a relatively large amount and accounts for more than 10% of the tax payable, he shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and a fine;If the amount is huge and accounts for more than 30% of the tax payable, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined. (Article 201 of the Criminal Law of the People's Republic of China).
Where a taxpayer fails to pay the tax payable and adopts the means of transferring or concealing property, making it impossible for the tax authorities to recover the tax in arrears, and the amount is between 10,000 and 100,000 yuan, he shall be sentenced to fixed-term imprisonment of not more than three years or short-term detention, and/or a fine of not less than one time but not more than five times the amount of the tax in arrears;where the amount is more than 100,000 RMB, the sentence is to be between three and seven years imprisonment and a concurrent fine of between one and five times the amount of taxes in arrears. (Article 203 of the Criminal Law of the People's Republic of China).
3) Compensation for breach of contract.
In addition to administrative or criminal liability for the tax itself, practitioners in the entertainment industry may also be liable for breach of contract. At this stage, some investors, brand merchants and brokerage companies (signatories) will require artists to comply with tax laws and regulations and pay taxes when signing cooperation agreements with celebrities, anchors and other entertainment personnel.
4) Careers have been greatly affected.
For tax evaders in the entertainment sector, tax evasion will have a great negative impact on their careers.
As early as 2014, the State Administration of Radio, Film and Television officially issued a notice on "** Bad Artists" - "Notice of the General Office of the State Administration of Press, Publication, Radio, Film and Television on Strengthening the Management of the Production and Dissemination of Radio and Television Programs, Film and Television Dramas and Online Audiovisual Programs", and carried out a "** In April 2022, the Cyberspace Administration of China issued the "Notice on Carrying out the Special Action of "Clear and Rectification of Chaos in the Field of Online Live Broadcast and Short **" , the notice pointed out that it is necessary to resolutely curb the illegal comeback of bad artists, and strictly rectify the disguised comeback behavior of blocked accounts such as "cross-platform registration" and "diversion to outside the site".
Therefore, once it is tainted with tax evasion, it will be a devastating blow to the career development of relevant entertainment industry practitioners.
Fourth, how to do a good job of tax compliance for key groups in the entertainment industry.
1) Beforehand: before the tax inspection takes place.
Hire a professional legal institution to make tax risk mitigation and optimization arrangements from the enterprise side and the individual side
1.Due diligence ("tax physical examination"): conduct tax legal due diligence, comprehensively sort out tax-related issues, propose solutions, and proactively resolve relevant risks;
2.Compliance construction ("tax plan"): comprehensively sort out the income and expenditure of enterprises and individuals, the standardization of invoice use, etc., and establish a tax compliance system for enterprises and individuals (such as the use of invoices, the retention of business contracts and other vouchers, etc.);
3.Tax optimization: Establish a reasonable tax optimization system, make full use of the current preferential tax rules, and reasonably reduce tax costs
4.Enterprise architecture building: build a reasonable enterprise architecture system and carry out daily business through the enterprise system;
5.Individual income tax compliance: Centralized sorting out of individual tax issues, completion of income nature recognition, annual final settlement and other work under professional guidance, and fulfilling individual income tax payment obligations.
Through the above methods, tax issues can be solved from three dimensions: existing risk mitigation, future risk prevention and control, and tax compliance optimization at the enterprise and individual levels.
2) During the matter: when encountering tax reminders or tax inspections.
If an enterprise or individual has tax problems, the tax bureau usually does not directly enter the stage of inspection and punishment, but will give the enterprise and individual the opportunity to self-examine and deal with it by prompting and reminding, urging self-inspection and rectification (requiring self-inspection statement documents), and interviewing and warning.
In the context of increasingly standardized tax supervision, tax inspections usually have a relatively sufficient basis, and the launch of the new golden tax system has greatly reduced the possibility of "finding a relationship to do things" to solve tax problems.
In this context, practitioners in the entertainment industry should keep in mind the principle of "two wants and two don'ts".
First, we should pay attention to it positively, do not delay replying, and solve problems negatively. The first paragraph of Article 88 of the Law of the People's Republic of China on the Administration of Tax Collection clearly stipulates that "when a taxpayer, withholding agent, tax guarantor and the tax authorities have a dispute over tax payment, they must first pay or release the tax and overdue fees or provide corresponding guarantees in accordance with the tax payment decision of the tax authorities, and then they may apply for administrative reconsideration in accordance with the law."Those who are dissatisfied with the administrative reconsideration decision may file a lawsuit with the people's court in accordance with the law." In other words, if a tax penalty decision has been involved, even if you are not satisfied with the penalty decision, you must pay the tax or provide a guarantee in advance, and at the same time hire a professional agency to handle the tax-related dispute. Otherwise, even if the tax bureau finally changes the penalty decision, according to Article 32 of the Tax Collection and Administration Law, it is still a situation where "the taxpayer fails to pay the tax within the prescribed time limit or the withholding agent fails to pay the tax in accordance with the regulations", and the enterprise or individual still needs to pay the late fee
Second, it is necessary to deal with it professionally, hire a professional agency to comprehensively verify the tax-related risks of the enterprise and design solutions, and truthfully disclose the above risks and solutions to the tax authorities, strive for lighter penalties and reduce the impact.
Summary: The cases of continuous tax penalties and "ruining" careers of online anchors and popular celebrities also show the determination of the tax authorities to continue to increase tax supervision in the entertainment field and the online live broadcast industry.
In this context, tax compliance is no longer the "preferred option" for practitioners in the entertainment industry, but has become a "must-answer question" for "top priorities".
From the dual dimensions of enterprises and individuals, as well as the two aspects of pre-prevention and control, and in-process processing, the use of professional solutions for due diligence, tax compliance, and tax optimization to solve tax-related issues in the entertainment industry will become the content that all entertainment professionals should focus on in the next stage.
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