China, Hollywood studios solve tax row over movies

LOS ANGELES - Agence France-Presse

China has agreed to pay Hollywood studios for its films in a dispute over a Chinese tax on movie profits, which totals billions, according to reports. AFP photo

China will pay major Hollywood studios tens of millions of dollars in owed local box office revenues following the resolution of a tax row, the studios said Aug. 13.

State-owned China Film Group stopped payment at the beginning of the year, when American studios took issue with a two percent value-added tax that the world’s most populous nation was levying on US films.

The affected US studios include Sony, Warner, Fox, Disney, Paramount and Universal.

In a statement, the Motion Picture Association of America, which represents the studios, signaled an agreement had been reached.

“The MPAA understands that the China Film Group stopped payments owed to MPAA studios in China pending resolution of the application of a new value-added tax (VAT) due to be implemented nationwide as of August 1,” it said.

“We are pleased to hear that the Chinese government has addressed the matter and all money due will be paid in full. It is our understanding that the payment process has recommenced.”

According to The Hollywood Reporter, CFG owed more than $31 million to Warner for “Man of Steel,” $23 million to Sony for “Skyfall” and $23 million to Fox for “Life of Pi.”

Under the terms of that accord, heralded as historic, the number of US films that can be distributed in China per year was increased to 34 from 20. The studios’ revenue share from China was fixed at 25 percent (up from 13 to 17 percent).