American film studios say they have settled a tax dispute with Chinese authorities over movie profits from some of the year’s biggest box office films.
Hollywood studios stopped receiving shares of profit in October or November from Chinese releases after state-owned China Film Group slapped a new 2% value added tax on ticket sales.
US film companies used to take a share of 25% and say the Chinese distributor owes them $200 million for hit movies such as Man Of Steel and Skyfall.
The Motion Picture Association of America says the Chinese government has now intervened in the dispute and “all money will be paid in full.”
An agreement in 2012 between US vice president Joe Biden and then Chinese vice president Xi Jinping saw the number of foreign films allowed to be screened in China to 34.
Foreign studios should receive a 25% share of box-office takings, with no deductions.
“Chinese authorities agreed that additional payments, including any taxes, would not come out of the 25% split. But late last fall, the China Film Group informed studios that it intended to pass along the tax after all,” the Hollywood Reporter said.
China’s box office revenues increased by 36% to $2.7 billion in 2012, making it the world’s second-biggest movie market behind the United States.
by Maesie Bertumen