Hollywood Prevails in Tax Dispute With China

Hollywood has prevailed in a dispute with China's state-owned film distributor that had held up hundreds of millions of dollars in box-office payments due US studios.

A standoff over whether a new value-added tax should be taken out of their cut of box-office receipts has been resolved in the American movie industry's favor, according to Motion Picture Association of America Chief Executive Chris Dodd. China Film Group Corp., a state-owned distributor, attempted to deduct the tax from Hollywood studios' share of ticket sales in the country. Under an agreement reached last year by American and Chinese officials, foreign movie producers can collect as much as 25% of ticket sales in China. American studios this year objected to the deduction, arguing that the roughly 2% tax wasn't their responsibility, and as a result refused to accept any payments from China Film for their productions.