Contracts signed with actors, singers and tax calculation methods

Package contract mechanism and cost arising

In film production activities, performance contracts between producers (NSX) and actors are fundamental legal documents clearly stipulating the rights and financial obligations of the parties.

Talking to Lao Dong reporters, producer Kevin Huynh - the person behind film projects such as "Linh Tram", "Hề" and "Cha, con thang An" said that the popular contract model currently on the market is a package contract.

Usually, performance contracts are signed in a package form. The producer will fully pay the remuneration and taxes to the actors according to the agreement," producer Kevin Huynh said.

Regarding the costs incurred during filming such as extending filming time, increasing work schedules or changing settings, this producer affirmed that "it is mandatory to go through an additional agreement between the two parties after the main contract has been established".

With singers, according to a show organizer, usually in performance contracts signed with artists, producers, and organizers will pay cat-xe in the form of "both paying cat-xe and paying taxes to the artist".

For example, when I invite a singer to sing, I will tell them that their cat-xe in this performance night is about 200 million VND. The singer receives enough, and the tax will be paid by the Organizing Committee and the producer" - the show organizer said.

Singers (belonging to the group of performing artists) and actors have their own specific cat-xe and remuneration. Singers receive cat-xe according to the level of fame, the scale of the show, the commercial nature of the show... Meanwhile, actors will have many different ways when signing a contract with a film producer.

Actors' salaries are divided according to revenue

Regarding the trend of actors not receiving fixed remuneration but sharing according to box office revenue, producer Kevin Huynh said that this is a mechanism that is rarely widely applied due to its high risk nature. This form usually only appears in less than 3 cases.

First, actors use part or all of their cat-xe money to convert into a percentage of capital contribution to the project.

This clause is mandatory to be supplemented to the contract. At that time, actors play the role of an investor, if the film wins, they enjoy profits, and if they lose money, they have to bear risks themselves.

Second, actors receive 100% of their performance fees, and also spend extra money from their own pockets to invest separately in the film. At that time, the box office profit sharing ratio will be calculated independently on this additional capital contribution.

Third, the cat-xe and investment are completely separated into two separate contracts. Artists still receive full acting fees, while the contributed capital enjoys profits according to the negotiated ratio.

Converting cat-xe, remuneration into contributed capital

Analyzing more deeply from a legal perspective, Lawyer Truong Van Tuan (Trang Sai Gon Law Office) said that the act of actors converting remuneration into capital contribution to film projects is legal under Article 34 of the 2020 Enterprise Law, because capital contribution assets can be cash or other assets that can be valued.

However, the tax authority will consider the nature of the actual transaction, not just based on the contract form.

If the initial contract clearly defines the specific remuneration level, personal income tax obligations from wages and salaries have arisen immediately at that time. The fact that actors use this income to contribute capital afterwards does not change or eliminate the initial tax obligations," Lawyer Truong Van Tuan emphasized.

Also according to the lawyer, the boundary between optimizing legitimate costs and tax evasion lies in the economic nature. If artists both act, and actually invest capital and share the risk of losses with producers, separating two sources of income (performance fees and investment returns) is completely legitimate.

On the contrary, if the money is essentially a fixed fee but is "name changed" to investment returns to evade the progressive PIT rate (up to 35%), this will be considered a distorted act to evade tax.