Fan Bingbing May Be Fined Over $100M by China's Tax Authorities

George Pimentel/WireImage
Fan Bingbing

The silver lining for the embattled star, who finally broke her silence, is that she might escape criminal prosecution if she pays the enormous fines in full.

China's state news outlet Xinhua issued its first official report on the mysterious case of missing A-list actress Fan Bingbing on Wednesday — and the news for the embattled star is indeed dire.

The report suggests Fan is facing fines totaling approximately 479 million RMB ($70 million), along with another bill for back taxes of 255 million ($37 million). Other media outlets in China are reporting that she could owe considerably more, with 880 million RMB ($128 million) the most commonly cited figure.

If Fan pays the staggering sums in full she will escape criminal prosecution, however, since it is her first offense, the report added.

China's highest-paid actress and the go-to face for luxury endorsements in the country, Fan hasn't been seen in public since July 1, when she became embroiled in a very public tax evasion scandal. She also had been silent on Chinese social media since July 23.

But shortly after Xinhua's story appeared online, Fan issued a lengthy apology statement to her 62 million followers on Weibo, saying: "I failed my country which nurtured me; I failed the society which trusted me; I failed the fans who loved me."

In regards to the steep fines she is facing, Fan's statement said: "I totally accepted all of them, and will raise funds to pay my taxes and penalties regardless of any obstacles." (Fan's full apology letter is below)

The actresses' mysterious disappearance has sparked a wave of speculation among Chinese fans and onlookers, with rumors ranging from claims that she is under the custody of Chinese authorities to reports that she had fled to Los Angeles to seek asylum in the United States. The reports emerging Wednesday have been silent on Fan's whereabouts, and whether she is detained. 

The mystery of Fan's official status and her sudden toxicity in the Chinese press has plunged several high-profile film projects into uncertainty, including Universal's upcoming female-ensemble thriller 355, in which Fan was set to co-star opposite Jessica Chastain, Penelope Cruz and Lupita Nyong'o. 

Fan's trouble began in June, when a nationally known former TV host leaked documents demonstrating an alleged tax-dodge scheme by an unnamed major star — instantly identified online as Fan. The materials were said to reveal the allegedly widespread, but thoroughly illegal, practice of "yin-yang contracting," whereby production companies provide actors with two sets of pay contracts: one small one to submit to the tax authorities, and a second revealing the star's much larger true pay. The leaked docs were said to show that Fan tried to claim $1.56 million (RMB10 million) for four days work on an upcoming Chinese film when her secret pay actually totaled an additional $7.8 million (RMB 50 million).

Fan's representatives strenuously denied the allegations, saying that they amounted to slander and that she had hired a prominent law firm in Beijing to explore pressing charges. But various authorities in the Chinese government simultaneously announced that they were launching a series of investigations, including one in China's Jiangsu Province, where Fan's personal film company is based.

Xinhua's report Wednesday said: "In June, after people reported Fan Bingbing’s “yin-yang contract” related to tax issues, the State Administration of Taxation attached great importance to the case and was obliged to instruct the tax authorities in Jiangsu and other places to comply with the law. Investigations were carried out to verify that the facts of the current case have been ascertained."

The report elaborates that Fan was found to have evaded taxes on several occasions, with the sums totaling hundreds of millions of yuan. 

"On Sept. 30," the report continues, "the Jiangsu Provincial Taxation Bureau officially issued [its decisions concerning] Fan Bingbing, requiring them to recover the taxes, late fees, and fines." The notice goes on to say that if Fan's many fines are paid "within the prescribed time limit ... her criminal responsibility shall not be investigated." But if she fails to meet the payment deadline, her case will be "transferred to the public security organ for handling according to the law."

Not all parties associated with Fan's case appear to have been so lucky to escape criminal prosecution, however. The Xinhua report refers to a "certain person" at Fan's company in Jiangsu — her agent, Mou Enguang, according to local reports — who was found to have destroyed accounting documents in an attempt to obstruct the authorities' investigation. The person is said to have been taken into custody. 

The statement also contains a stark warning to the Chinese entertainment industry as a whole, saying that the State Administration of Taxation has discovered broad signs of yin-yang contracting and tax evasion and is working to clean up and regulate the film and television sectors.

"Film and television enterprises and related employees who have self-examined and rectified themselves before Dec. 31, 2018 and paid owed taxes to the relevant authorities shall be exempted from administrative punishment and shall not be fined," it says. But those who "seriously evade taxes and fail to perform their duties according to law will be held accountable and pursued for legal responsibility."

Presuming most local entertainment firms are guilty of tax evasion as suspected, the remaining three months of 2018 could put a significant dent in the bottom lines of China's top studios. Meanwhile, the Chinese government's tax collector appears to be in for a windfall.  

Fan Bingbing's full apology letter is below. 

Recently I have been enduring an unprecedented amount of pain, undergoing deep self-reflection and introspection. I am deeply ashamed and feel guilty for what I have done, and I offer my sincere apologies to everyone.

For a long period of time, I did not uphold my responsibilities of safeguarding the interests of my country and society against my personal gain. I feel ashamed that I committed tax evasion in the film "Unbreakable Spirit" and on other projects by taking advantage of “yin yang contracts.” Throughout these days of cooperation with the taxation authorities’ investigation into my accounts, as well as those of my company, I have come to realize that, as a public figure, I should have observed the law, setting a good example for society and the entertainment industry. I shouldn’t have lost the ability to control myself in the face of economic interests, allowing myself to break the law. Here I sincerely apologize to society, my friends who care about me, the public and the taxation authorities.

I completely accept the penalties given by the taxation authorities after their thorough investigation. I totally accepted all of them, and will raise funds to pay my taxes and penalties regardless of any obstacles.

I have been an ardent art lover since I was a child, and I’m fortunate to have been a part of the rise of the film and television industries. Thanks to guidance from veterans as well as the love of the audience, combined with my own hard work, I have achieved some success in my career. As an actor, I take pride in showcasing our country’s culture on the global stage, and I do my best to be in the forefront of this. I owe my success to the support of my country and the people. Without the great policies of the [Communist] Party and the state, without the love of the people, there would have been no Fan Bingbing.

Today I’m facing enormous fears and worries over the mistakes I have made. I failed my country which nurtured me; I failed the society which trusted me; I failed the fans who loved me. I offer my sincere apology here once again! I beg for everyone’s forgiveness!

After this incident, I believe that I will uphold the law and respect official orders, while upholding my responsibilities. While I will continue to produce great work for everyone, I will monitor my company’s management carefully to ensure that my company abides by the law, building it into a great, sophisticated company with high integrity, in order to spread positive values to society!

Again, I apologize to society and my adoring fans, as well as to my friends and family who care so much for me. I sincerely say, I am sorry!

Fan Bingbing
October 3 2018