UPDATED: Missing Chinese celebrity Fan Bingbing is to be heavily fined for tax evasion, it emerged on Wednesday.
China’s State Administration of Taxation said that, following an investigation into her finances, Fan is to pay “hundreds of millions” of yuan in back taxes and fines. According to state news agency Xinhua, the extent of Fan’s payments could amount to RMB 479 million, or about $70 million. If she pays in full, she may avoid a criminal trial and inevitable conviction.
Hours after the report was released, Fan – who had disappeared from public view in June – issued an apology on Weibo, China’s version of Twitter, saying she had let down her country and her fans. “Today I’m facing enormous fear and worries over the mistakes I’ve made,” Fan wrote. “I have failed my country, society’s expectations and the love from my fans. Please accept my sincere apology. I beg for everyone’s forgiveness.”
She said she accepted the investigation’s findings and the Chinese authorities’ demands, adding that she would do her best to raise funds to pay the back taxes and fines. However, Fan did not say how she would raise the money, and her participation in projects such as “355,” the all-female action movie produced by Jessica Chastain and unveiled to major buzz in Cannes, is in doubt.
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Fan is China’s highest-paid actress and a star of films including “X-Men: Days of Future Past” and “Iron Man 3.” Her troubles began early in the summer after she was accused by another celebrity of tax evasion.
The other celebrity used social media to post copies of two contracts purportedly relating to Fan’s role in the upcoming Huayi Brothers-produced film “Cell Phone 2.” The so-called “yin-yang contracts” were of different values, and the assumed purpose was to declare only the smaller contract to tax authorities. Fan and the production companies denied the accusations.
According to the investigation conducted by China’s State Administration of Taxation and tax authorities in Jiangsu province, where Fan’s company is registered, the actress was paid a total of $4.4 million (RMB 30 million) for her role in “Unbreakable Spirit,” a war action film that also stars Bruce Willis. Of that, only $1.46 million (RMB 10 million) was reported as taxable income. The rest, $2.9 million (RMB 20 million) covered by other contracts, was considered an evasion of personal tax worth $900,000 (RMB 6.18 million) and business taxes of $163,000 (RMB 1.12 million).
The investigation also found out that Fan and a company acting as her legal representative had avoided paying a further $36 million (RMB 248 million) of taxes, of which $19.5 million (RMB 134 million) was considered illegal evasion. The tax authorities ordered Fan and the company to pay back taxes worth $37 million (RMB 255 million), plus $4.8 million (RMB 33 million) in fines.
After Fan’s alleged double contracts were leaked, tax authorities announced in June that they would open an investigation into the tax practices of the entertainment industry. But they did not specify the Fan case and did not acknowledge her whereabouts.
Speculation has been rife for the past three months that Fan was under house arrest, banned from overseas travel, or even in prison. Despite the imposition of the fines, the authorities have so far shed no new light on her liberty or detention status.
Fan and numerous other operators in the entertainment industry are also known to make use of legal tax loopholes, such as setting up subsidiary companies in the western province of Xinjiang or other low-tax regions. While that is not illegal, it could be regarded in China’s tightening political climate as shirking one’s patriotic duty and disrupting social harmony.
Fan has been the public face of such brands as Montblanc, Louis Vuitton, De Beers, and fashion house Guerlain. So far, only Montblanc is reported to have severed its connections with her, but she has been conspicuously absent from the other campaigns. Guilt by association is particularly worrisome in China, where government displeasure can quickly doom a person’s or a company’s prospects.
Chinese authorities have a track record of punishing celebrities in order to set a high profile example to others. In 2002, actress Liu Xiaoqing was imprisoned on tax charges.