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Report: China Owes $100M In Unpaid Royalties To Hollywood Studios

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LOS ANGELES (CBSLA.com) — A Chinese trade association may owe over $100 million in unpaid royalties to several of Hollywood’s biggest studios, according to a report.

The China Film Group, which handles theatrical film distribution throughout China, has delayed payments for box office receipts on some of the Hollywood’s biggest blockbusters, including “Man of Steel”, “Skyfall”, and “Star Trek Into Darkness”, The Hollywood Reporter reported Tuesday.

Studios haven’t been paid since late 2012 allegedly over a 2 percent value-added tax, which the China Film Group – a government-controlled entity that determines which films get released in China – wants the producers to pay, according to the Reporter.

Pamela McClintock, The Hollywood Reporter’s senior film writer, told KNX 1070 NEWSRADIO film execs are still mulling their strategy in China, which is expected to become the largest moviegoing market in the world within the next five years.

“The studios do not want to give up on China in any way, so I think that they’re willing to put up with circumstances that they otherwise wouldn’t ever put up with,” McClintock said.

While it remains unclear exactly what strategy the studios will pursue, McClintock said any steps taken to involve the Office of the U.S. Trade Representative to officially investigate possible violations of the WTO agreement would be “a dramatic step.”

The dispute – which originated with Twentieth Century Fox back in April – is believed to involve all six major Hollywood studios.

Ultimately, McClintock said, any resolution is unlikely to come from this side of the Pacific.

“It has to be resolved within the Chinese government, who’s gonna bear this tax,” she said. “The studios are pretty insistent that they are not gonna pay this 2 percent tax.”

At least one source expected the standoff to be resolved no later than the end of summer, according to McClintock.

Click here to read the full report from The Hollywood Reporter.

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