The importance of paying right amount of tax

The State Administration of Taxation, China's top tax authority, has told local tax authorities to thoroughly investigate alleged tax evasion by top celebrities in the film and television industry after an online post exposed the co-existence of "yin and yang" contracts in the entertainment sector. Many celebrities sign two contracts - one real with the real (higher) amount they receive, and the other with a lower payment and perks which they use to evade paying the due tax.

According to China's taxation laws, individual income tax (IIT) is deducted from the salary of employees by the employers and paid to the government. But the tax levied on the entertainment industry, including celebrities, is different from IIT for salaried people, because the service contracts in the sector could involve payments of dozens of millions of yuan.

One of the reasons some individuals intentionally or unintentionally evade tax is the lack of sufficient knowledge of the taxation laws. Especially those some celebrities who earn huge amounts and have big fan following should realize the importance of paying the due tax and never evade tax.