Celebrities are being reported for tax evasion again! Splitting contracts, receiving payments from private accounts... what exactly is going on?

The news that actress Song Zu'er was reported by former employees for tax evasion of 45 million yuan recently made it to the hot search.

According to relevant media reports, Song Zu'er has been accused of repeatedly evading personal income tax by splitting contracts and receiving payments from private accounts, as well as underpaying business tax and surcharges. There is also information that it "maliciously cancelled" three individual industrial and commercial households with the purpose of tax evasion.

However, it is suspected that a social media account called "Song Zu'er Official Blog Bar" sent a message saying, "This is spreading rumors, Zu'er abides by laws and regulations, and follow-up measures are being discussed.".

The news from all parties has not been further confirmed so far. However, the online rumors of splitting contracts, receiving payments from private accounts, and maliciously canceling industrial and commercial accounts are not uncommon in the past incidents of "celebrity crashes" and "internet celebrity house collapses". What exactly is going on with these practices? China News Agency is interviewing professionals through a direct train and interpreting each one.

Why is "splitting contracts" illegal?

In recent years, various tax evasion methods, including Fan Bingbing's "Yin Yang Contract," have attracted the attention of netizens. What about the "split contract" involved this time?

Hao Guangcai, the director and asset appraiser of Jinan Tianze Asset Appraisal Office of Shandong Quanyou Tax Agent Co., Ltd., stated in an interview with China News Agency Guoshi Direct that splitting contracts, if used normally, is a normal and reasonable way to avoid taxes.

For example, a contract contains two different items, sales and services, and the tax rates for sales and services are different. If the two items are taxed in the same contract, they will be taxed accordingly. If the tax rate is low, they will also be taxed accordingly. But if the sales and service are divided into two separate contracts according to the actual situation of the project in the contract, and the tax is calculated and paid separately, the project with a lower tax rate can be taxed according to the original tax rate. If strictly operated in accordance with the law and regulations, this is considered reasonable tax avoidance.

However, some illegal enterprises or individuals illegally divide projects with higher tax rates into contracts with lower tax rates to calculate and pay taxes, which is considered illegal. Evidence of this illegal operation can be found through various channels such as contract payments, transaction accounts, and settlement acceptance details.

In addition, Hao Guangcai also stated that the split contract may seem similar to the familiar yin-yang contract in recent years, but the two approaches are not entirely the same. The yin-yang contract is likely to be suspected of money laundering, which is even worse. For example, when a contract was signed for 50 million yuan, only 3 million yuan was actually collected, and the remaining 47 million yuan was "embezzled" by relevant stakeholders after paying the taxes. Once this practice is identified as money laundering, there is a risk of criminal punishment.

Where is the evil of maliciously canceling individual business owners?

The online information also claimed that Song Zu'er was involved in "maliciously canceling individual industrial and commercial households", and what happened?

Hao Guangcai explained that some illegal enterprises or individuals register some individual businesses in advance, use the actual operation of the company, and use individual businesses to issue invoices. Individual industrial and commercial households are often used as tax evasion tools by criminals due to their characteristics of fixed taxes and difficulty in being inspected after deregistration. After using them for a period of time, they are afraid of being discovered and deregistered before being inspected by the tax authorities. Once the entity is deregistered, it becomes even more troublesome to check again.

But this seemingly clever tax evasion is not entirely traceable. Through various channels such as past accounts, bank statements, and invoicing records, it is still possible to catch the "fox tail" of tax evaders. As for tax evasion through methods such as receiving payments from private accounts, it is a very obvious illegal act, unlike the complex act of maliciously canceling individual business owners.

At present, there is a section of information that seems to have exposed the time of the incident, which is "underpayment of business tax and surcharges".

"According to the current tax system, there is no 'business tax' as a tax category." Hao Guangcai stated that the business tax was established in 1994, and in May 2016, the pilot program of 'replacing business tax with value-added tax' began, gradually abolishing the business tax. On November 19, 2017, the State Council made a decision to abolish the Provisional Regulations of the People's Republic of China on Business Tax and amend the Provisional Regulations of the People's Republic of China on Value Added Tax, and the reform of replacing business tax with value-added tax was fully completed.

Based on this timeline, it can be inferred that if there is a suspected underpayment of business tax, it must have occurred before November 19, 2017. According to relevant information, the time for Song Zu'er to cancel three individual industrial and commercial households is after this time node.

According to Qichacha, Song Zu'er, originally named Sun Fanqing, is currently affiliated with four companies, with only Shanghai Hongquan Film and Television Culture Co., Ltd. remaining. Song Zu'er serves as a supervisor in the company. Among them, three enterprises, including Xinyi Junjuan Film and Television Culture Studio and Qingdao Qiding Film and Television Culture Studio, with Song Zu'er serving as the legal representative, were deregistered in January 2020, January 2022, and March 2023, respectively.

However, Hao Guangcai also stated that although the method of canceling individual industrial and commercial households is often maliciously exploited by illegal tax evaders, the existence of tax evasion behavior depends on the investigation results of tax and other official institutions, and cannot be speculated on.

Star tax evasion "takes advantage of other taxpayers"

Fan Bingbing, Zheng Shuang, Viya, Deng Lun In recent years, multiple performers, internet celebrity anchors, and others have been punished for tax evasion.

"Star tax evasion not only damages national tax revenue, but also China's legal order." Professor Liu Jianwen from Peking University Law School said in an interview with China News Agency's Guoshi Direct Car that celebrities, as a highly well-known and high-income group, their teams or individuals "deliberately" evade tax payments, which will have a "negative comparison" effect on ordinary taxpayers to a certain extent, thereby affecting their tax paying enthusiasm and initiative to abide by laws and regulations. As public figures, celebrities should cherish the "flow" bestowed upon them by the public, be positive drivers of energy, and role models who abide by laws and regulations and actively contribute to the country.

As for some so-called "fans" who complain about tax evasion celebrities, arguing that they are busy with work and do not have time to pay attention to specific "details" such as taxes, Liu Jianwen believes that high-income groups such as celebrities and internet celebrity anchors should pay taxes corresponding to their income while enjoying more public resources provided by the country. Failure to fulfill their tax obligations is equivalent to "taking advantage of other taxpayers".

The 2009 Amendment to the Criminal Law changed the crime of "tax evasion" to "tax evasion" and added a clause that conditionally exempts first-time offenders from criminal responsibility. Some netizens expressed that they do not quite understand this article and hope to increase the cost of tax evasion and illegal activities.

Liu Jianwen believes that the reason why "tax evasion crime" is revised to "tax evasion crime" in the Criminal Law is a respect for people's property rights. "Stealing" refers to embezzling the property of "others", while "escaping" refers to not fulfilling one's tax obligations after making money, which is more in line with the overall nature of China's criminal law system after revision.

As for those who admit their mistakes and actively make up payments, the implementation of exemption from criminal liability for the first offense within five years is beneficial for protecting national taxation and public interests. If criminal measures and judicial control are taken against parties who need to pay large amounts of tax related funds such as compensation and penalties, it is not conducive to their disposal of property to raise the funds that should be paid.