Entertainment: Who still wants to fall in love when there are cheats?

Chapter 131 Legal
"Just by opening a studio, you can reduce your tax by 10%?" Ning Hao stared wide-eyed at Li Boda.

"Yes, that's the minimum. In fact, opening a studio offers many other advantages besides reducing the tax rate from 45% to 35%. For example, if you buy a house in your own name, the money you spend on the house is your personal income after taxes. But if you open a studio, you can buy the house in the studio's name, and the money spent on the house can be considered part of your studio's business scope."

"For example, if you earn ten million this year, including the negligible basic tax rate, you'd have to pay about four and a half million in personal income tax. But after you open a studio, you only need to pay three and a half million. However, that's ten million in taxes. If you take three million out of that ten million to buy a house, that's considered an expense for the studio, your business investment cost. Your profit is only seven million left. So, you pay taxes based on seven million, which means you only need to pay two and a half million. You can even include your daily food and drink expenses, transportation costs, and the purchase of books or computers in your studio's operating costs. At the end of the year, you pay taxes based on how much money is left in your studio's account. You might even only need to pay two million a year..."

Li Boda spoke to Ning Hao in relatively simple words.

Ning Hao's eyes lit up when he heard this.

"So, if I make money and buy a gold necklace to wear around my neck, I don't have to pay taxes on the price of that gold necklace?" Ning Hao made an analogy.

“That’s right, you can say that this gold necklace is an investment your studio made to build its image; it’s an investment cost and operating cost,” Li Boda nodded and said.

"Great, that's wonderful! I'll go open the studio right now!" Ning Hao couldn't wait to get started.

"Director Ning, Director Ning, today is our movie roadshow promotion, Director Ning!" Huang Bo and the others quickly pulled Li Boda aside.

"Uh, we still have a roadshow to do. I forgot about that." Ning Hao chuckled awkwardly. However, he was determined to set up a studio. Even though there were almost no precedents for studios in mainland China, he was determined to open one just for the sake of legally and legitimately paying less tax.

Li Boda, in the end, did not go with Ning Hao and the others to do roadshows. Instead, he started traveling all over the country, researching all kinds of information.

Because policies, brokerage, and other aspects vary from place to place, preferential policies also differ from place to place.

For other companies, there are many factors to consider, such as operating costs, transportation convenience, and the surrounding environment.

However, Li Boda's studio was essentially just an empty shell, established solely for the purpose of legally avoiding taxes. Therefore, Li Boda didn't need to consider many aspects, and naturally, he didn't need to specifically locate the studio in an economically prosperous area.

Even so, no, it should be said that precisely because of this, Li Boda had far too many choices, and in the end, he had to travel all over the country in order to get the best preferential policies.

Finally, Li Boda spent half a month conducting his research and then established his first studio.

After registering the studio and going through a bunch of procedures, the studio was established. Then Li Boda hired a local to be stationed at the studio—well, actually, whether or not this person was there didn't really make much of a difference.

It's called a studio, but it's just a dilapidated house with a telephone installed. They pay the person a few hundred yuan a month to work from 8 am to 5 pm. What they do at work is not required; they can read novels or watch TV, but they're just occupying someone's name.

After that, Li Boda opened different studios in several different locations.

These are all entertainment-related investment studios, and they'll finally hire a professional accountant...

Then Li Boda placed the contract for his previous investment in "Crazy Stone" under his own studio.

After Li Boda's series of adjustments, he was not so harsh as to only require a 3.5% tax rate, but he still managed to bring it down to below 10%.

In other words, if Li Boda earns one million, after these studios' turnover adjustments, he only needs to pay 100,000 in taxes, which is a huge difference from the previous 450,000 in taxes.

And all of this is perfectly reasonable and legal. The law can't say that Li Boda is wrong, because Li Boda's actions are completely reasonable and legal, without the slightest problem.

In fact, if Li Boda wanted to, he could have gone even further. After all, the skills he acquired came from that rich second-generation who took crooked paths. He could have easily pushed them even lower. However, if he pushed them too low, the margin for error would be smaller, and he would have to put in more effort. So, Li Boda decided not to go to such extremes.

Of course, Li Boda didn't see it as extreme, but to outsiders, it was the most extreme thing imaginable.

In reality, many large companies and internet companies operate in this way, just like Li Boda did. As for the entertainment industry, no one, or rather, no celebrities, seems to realize this. So they try all sorts of ways to create dual contracts, but never think of using this method to legally evade taxes.

Of course, once Li Boda's methods spread, celebrities did learn them, which didn't stop some from continuing to use dual contracts (one for official purposes and one for private purposes) while still legally evading taxes to the extreme. After all, everyone likes money, and nobody wants to pay more than they should.

It took Li Boda almost a month to get everything sorted out, inside and out, before he could finally consider it done.

From then on, Li Boda would collect receipts for everything from plane tickets and train tickets to meals and small purchases, and he would put them under the management of his studio.

It's a bit stingy, but what can you do when it's legal?

Li Boda, busy with these nested studio projects, has been traveling all over the country and hasn't had time to keep up with the performance of "Crazy Stone".

Even when Ning Hao called Li Boda to tell him about the results of "Crazy Stone," Li Boda didn't have the time or inclination to pay attention.

Now that he's almost finished with his work, he finally has the time and energy to pay attention to the box office performance of "Crazy Stone".

However, by this time, "Crazy Stone" had already begun its theatrical run.

When Earl's "Crazy Stone" finished its run, the film's box office revenue stabilized at just over 35 million.

A film with a total investment of less than six million yuan grossed thirty-five million yuan at the box office.

Li Boda was very surprised by this number.

After all, these days, apart from a few big-name directors like Zhang Yimou, almost every film directed by other directors in China loses money at the box office. A film that grosses over ten million yuan is already among the top-grossing films of the year.

Therefore, the box office of "Crazy Stone" exceeding 30 million yuan really surprised Li Boda.

So Li Boda contacted Ning Hao.

"Director Ning, is our movie really doing that well at the box office?"

"Impressive, right? Actually, if you, Da Ge, could show up more during the roadshow, our movie's box office would definitely be even higher," Ning Hao said with a smile.

"Director Ning, you've given me such a great opportunity. I'll just play a minor supporting role."

"I'm not just flattering you, it's the truth. A lot of women brought their boyfriends or husbands to see our movie, just for the rich kid you played. Even though your character is stupid and wicked, he's handsome, so it's no wonder some women went to the theater… Tsk, looks like I'll have to cast one or two good-looking actors in my future movies." Ning Hao muttered to himself.
When Li Boda heard Ning Hao say this, he was at a loss for words.

Does this mean I've become popular with audiences in the film industry?
“Brother Da, although our movie has already finished its theatrical run, the money won’t arrive anytime soon. According to the normal procedure, the money from the cinemas goes back to the cinema company first, and then the cinema chain company will hand over the money to… So the first batch of money will probably arrive in about three months. Three months later, within six months, we will receive another sum. If all goes well, our money will arrive within six months or a year…” Ning Hao explained to Li Boda.

He assumed that Li Boda was calling to collect money, and felt compelled to give Li Boda a proper explanation.

“I understand, I get it! I know that investing in movies doesn’t pay off so quickly.” Li Boda nodded. In fact, after acquiring the rich kid’s skills, Li Boda specifically investigated investment issues in the film industry and found that investing in movies, well, it’s not as easy as he had imagined.

Whether you make money or not is one thing, but when someone will pay you back is another matter entirely.

If you can get your investment profits back within six months, that's already incredibly smooth. If you can get them back within a year, that's considered pretty good, smooth, and trustworthy. Delaying it for two or three years is actually not uncommon in the entertainment industry.

So investing in the film industry is actually not that easy.

This is why many directors, despite being quite wealthy, never invest in their own projects. They know the tricks of the trade, and unless they really can't secure funding, they won't take a single penny out of their own pocket to invest in a film.

(End of this chapter)