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.

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.

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Wu Ying’s article has provoked a wide range of reactions, from both music lovers and online rock magazines. An article from Music Business China accused Wu of spreading rumors. Yang Zixu (杨子虚) from the influential WeChat account Music Heaven argued that making foreign bands pay taxes is a fair regulation, since local Chinese bands have to pay taxes as well.

Yang also pointed out that local Chinese promoters were guilty of taking advantage of the absence of regulations in the past, which resulted in several famous fiascos. For instance, in 2013 Aerosmith had to cancel their shows in Shanghai and Taipei due to the “local promoter’s inability to meet contractual obligations,” as a report from Billboard put it, and just last year, Nicki Minaj refused to perform at a “fake” music festival in Shanghai. According to the Music Heaven article, the new tax regulation will help to clean up the music industry, and to promote local Chinese bands over foreign bands.

Meanwhile, Chinese music lovers are already searching for other means to see their favorite bands live. The new and controversial Kowloon high-speed rail station in Hong Kong was full of Mainland Guns N’ Roses fans on November 20 for the band’s concert at the Asiaworld Expo Arena — the Guns have been on the Chinese government’s blacklist since the 2008 release of their infamous album Chinese Democracy. No doubt the same thing will happen next April, when German electronic music pioneers Kraftwerk return with their “3-D Show” to Hong Kong.

But not all Chinese music fans have the time or the money to go to Hong Kong to see their favorite bands perform. And the new regulation doesn’t affect only famous bands — which can always raise tickets prices — but also indie or underground bands touring China, and the independent live venues that host their shows.

The controversy around the new tax regulation hides already-existing practices that prevent foreign indie bands from touring China. Last year, a non-Chinese punk musician living in China confided to me that it was getting harder to organize shows in China for his band, since live venues ask foreign bands to pay a special fee — roughly 1,000 RMB ($150) — in order to bribe the local cultural office. Underground acts that don’t attract a large enough audience are doomed to pay live venues for the privilege of performing. Over the past few years, foreign indie bands have been specifically targeted by the authorities, shows have been canceled, and live venues have been fined for hosting foreign live acts without official approval. A promoter of underground music in China — who wished to remain anonymous — recently told me that his punk show was canceled in 2018 because someone denounced him to the local authorities. Since he’d invited a foreign punk band without approval, the bar had to pay a fine of 20,000 RMB (~ $3,000) to the local cultural bureau.

This new tax regulation will likely have a major impact on the Chinese music scene, but it will also divide the audience between those who have the money to see expensive shows in China or Hong Kong, and those who will have to be satisfied with bootleg recordings. It’s already hard for underground foreign bands to perform in China — now local authorities will have even more leverage to cancel shows and fine independent live venues. Will the dakou era return, as Wu Ying fears? It may be even worse than that: dakou CDs and tapes have already disappeared, and the gray market in which much underground music has operated in China over the last few decades seems to be disappearing along with them.

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Cover photo: Wham! becomes one of the first foreign bands to perform in the PRC in 1985 (Reddit)

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