With a new tax on foreign acts, some music fans fear a return to the days when outside music was all but banned in China
It all started with a message posted on WeChat last month by Lao Zhang (老张), the manager of Shanghai indie livehouse Yuyintang (育音堂). In a very short post, Lao Zhang announced that according to a circular written by the Chinese tax office bureau, foreign bands (including bands from Hong Kong, Macao and Taiwan) performing in China would now have to pay a minimum 20% tax on ticket sales for each of their performances. This new regulation — following up on recent efforts by the Chinese state to reform its tax policy, but specifically targeting foreign bands — immediately sparked a huge controversy among Chinese music lovers.
Lao Zhang’s post
Wu Ying (武撄), a journalist for the Chinese version of Q Magazine, was the first to react in an article widely shared — and now censored — online, entitled, “Are we going to stop seeing foreign bands performing?” (Fortunately, the China Digital Times archived the post on its site.) In the article, Wu Ying tries to show the impact of this new tax policy on foreign acts, especially indie bands touring China. Here’s his argument in a nutshell:
Let’s say that an average Chinese live venue can accommodate between 600 and 800 people, and sell tickets from 100 to 300 RMB (about $15-45). In the best case scenario, a venue sells 800 tickets at 300 RMB each, earning 240,000 RMB (~ $35,000) total. The live venue has to use this money to pay for rent, staff, equipment, and the approval of the municipal cultural bureau. All that will cost roughly 100,000 RMB (~ $15,000), according to Wu. With the 140,000 RMB left, the venue has to pay for foreign band’s air travel (usually four to seven musicians), accommodation for one or several nights, catering, local transportation, and visa fees.
With the new taxation policy, the venue has to pay at least 20% of its total earnings to the tax department — 48,000 RMB in our case. This means that, according to Wu, foreign bands will almost always lose money when performing in China. The only viable solution would be to raise the price of tickets — maybe possible for mainstream acts, but commercial suicide for indie bands. For the journalist, this new taxation policy will de facto prevent foreign bands from touring China in the near future, and the country will go back to the dakou (打口) era, when the only way to listen to foreign music was through CDs bought on the black market.