China Owes Hollywood Millions and Isn’t Paying

Earlier Wednesday The Hollywood Reporter released an exclusive article claiming that China Film Group is not paying their share of box office revenues to various Hollywood studios. The coffers of blockbuster money earned from huge hits like Man of Steel and Star Trek: Into Darkness have still not made it back across the Pacific. The sticking point is a two percent value-added tax that studios in Hollywood are refusing to pay to China Film Group as they claim it violates a World Trade Organization agreement.

No investigation has been confirmed into whether a trade agreement is in violation, but talks between industry big shots and Chinese government officials are taking place. Apparently, there is debate over who should be responsible for covering the tax.

Last week, Despicable Me 2 was blocked by Chinese authorities for no apparent reason (although Despicable Me didn't play here either) and in June a similar incident was related back to protectionism of the homegrown animation industry.

For now, Hollywood will not pull out of the Chinese entertainment market as there is just too much money to be made here – the agreement with China Film Group entitles them to 25 percent of box office revenues (even if they have yet to see that 25). So you can expect releases as usual this summer – crossing our fingers that nothing else gets blocked. Just today, sci-fi thriller Pacific Rim was released in theaters and is expected to make another big bang in the Chinese entertainment market.

Here is a breakdown of some of what Hollywood is owed by China:

• Over USD 31 million to Warner Bros for Man of Steel, The Hobbit: An Unexpected Journey and Jack the Giant Slayer
• USD 23 million to Sony for Skyfall and After Earth
• USD 30 million to Paramount for Into Darkness, G.I. Joe: Retaliation and Jack Reacher
• Over USD 35 million to Disney for Iron Man 3 and Oz the Great and Powerful
  

Photos: wday.com, unblog.fr