Motion Picture Association Strikes Tax Deal with China

The Motion Picture Association of America has resolved a dispute with Chinese authorities over value-added tax payments that has held up payment for Hollywood movies distributed in China.

The 2 percent tax had been a major sticking point between the MPAA and the China Film Group, and Hollywood studios were reportedly owed between $150 million and $200 million, according to the Hollywood Reporter. The China Film Group had held back the payments to the studios, insisting that they cover the costs of the tax out of the 25 percent of box office receipts that they currently get.

MPAA chairman and CEO Chris Dodd, the former senator from Connecticut who co-sponsored the Dodd-Frank Act, hailed the agreement. “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,” he said in a statement Tuesday. “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.

“The U.S. and Chinese film industries enjoy a close and productive relationship and the MPAA is grateful to our counterpart, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) for their commitment in resolving this matter favorably,” Dodd added. “We look forward to further strengthening our ties with SAPPRFT as the Chinese screen community continues its path to becoming a global powerhouse in the international entertainment market.”