While students enjoyed a break from school, one of the highest-paid Chinese actresses, Bingbing Fan, faced a tumultuous summer. She was charged for tax evasion and may face legal prosecution. In the midst of the case’s widespread publicity, the Chinese government quickly enacted a significant tax hike targeted at Chinese celebrities.

This June, Yongyuan Cui, a well-known Chinese television-show host, blew the whistle on Fan’s “yin-yang contract” (meaning “half in the light and half in the dark.”) The actress officially earned 10 million yuan, approximately 1.5 million U.S. dollars, for a four-day film project, while unofficially receiving an additional 50 million yuan, approximately 7.3 million U.S. dollars, which was not declared to the Chinese Tax Bureau.

In response, the nation’s Cultural, Broadcasting, and Tax Bureaus published a joint announcement on June 27 focusing on “unreasonable payment within the entertainment industry.” A law raising income taxes from 6.7% to 42% on celebrities went into effect on August 1, and production studios and companies were required to pay back taxes for the last six months. In addition, local governments were required to eliminate low, celebrity-friendly tax rates, which were originally passed to attract investment from the entertainment industry.

Producers cancelled more than 70 film and production projects in response to the new tax law. The augmented tax rate and the requirement to pay off the taxes owed spurred outcries from screenwriter’s groups, and several film companies went bankrupt after paying overdue taxes. Xin Sun, lecturer in Chinese and East Asian Business at King’s College in London, said, “The major purpose of the campaign is to address social inequity. It is also in line with China’s plan to tighten up tax collection in recent years, mainly aimed at clamping down on tax evasion by mid-size and small enterprises.”

Media coverage sparked reactions from students. Yuki Zhang ’22, from Hangzhou, China, said, “More and more campaigns mean that it’ll be harder for the celebrities to evade taxes. Some Chinese celebrities might need to reflect on their extravagant lifestyles. No matter [whether] you are a super star or the secretary of the state, all of us need to abide by the values and rules of our society.”