Curtain Comes Down on Film Shares After Tax Probe
*Shares in major studios dropped by as much as the daily limit of 10% on Monday, with most staging minor recoveries the next day
*The stock turmoil was prompted by an official confirmation of a probe into tax evasion in the sector
Shares in Chinese studios bounced back slightly on Tuesday, after plummeting a day earlier as markets reacted to news that the industry was being probed for tax evasion.
The State Administration of Taxation said over the weekend (link in Chinese) that it had instructed tax authorities in Jiangsu province and other unspecified locations to investigate the film industry’s alleged use of “yin-yang” contracts, according to a Sunday post on its website. Such contracts often see film stars pay tax on a smaller sum of money than the real fees they receive from the studio.
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