MPAA Confirms Hollywood Victory in China Box-Office Standoff (Updated)

MPAA Confirms Hollywood Victory in China Box-Office Standoff (Updated)

Still not clear: Whether the 2 percent luxury tax issue is completely resolved going forward

The standoff over box-office payments from China to the six major Hollywood studios has been resolved — and the studios are getting "paid in full" — the Motion Picture Association of America announced Tuesday.

"We are pleased to hear that the Chinese government has addressed the matter and all money due will be paid in full. It is our understanding that the payment process has recommenced,” said Chris Dodd, head of the MPAA, in a statement confirming the news first reported by the Wall Street Journal.

Months of studio revenues were held up in a dispute over a 2 percent luxury tax China wanted to impose on box-office receiptsThe tax was not part of the new, more Hollywood-friendly trade agreement the sides hammered out last year, and studios saw it as a direct violation of their pact. 

That held up hundreds of millions in payments to studios, who refused to cash checks with the tax taken out going back to the release of "Life of Pi" last winter.

What's still not entirely clear: Whether studios would be allowed to forgo the tax entirely — or would have to pay a fraction of it. Dodd's use of the words "paid in full" would seem to indicate that the government has dropped the matter, but the MPAA declined to elaborate when contacted by TheWrap. 

Also read: Hollywood's Trouble With China? It Has All the Leverage

China Film Group, the state-owned distributor at the center of the dispute, has not been reachable. A representative for Sony declined to comment and representatives for Universal, Warner Bros., Paramount, Disney and Fox did not immediately respond to requests for comment.

Also read: China Film Group's IPO Could Ease Hollywood's Box-Office Headache for Good

As TheWrap reported last week, China Film Group's desire to soon go public put additional pressure on the state-owned distributor to end the standoff; CFG would have had trouble attracting foreign investment with that much debt still on the books.

China Film Group is the largest distributor of foreign films in the republic.

News of a deal is a boon for the movie industry, which sees China as an increasingly important source of theatrical revenue. Last year, China surpassed Japan to become the second largest market for movies in the world. Analysts predict that by 2020, it may eclipse the United States as the dominant source of box office revenue.