New rules levy annual income tax on gains from assets held in offshore trusts, targeting tax avoidance by high-net-worth individuals.
China will tax gains on assets placed into offshore trusts, including shares and real estate, effective immediately. The Ministry of Finance said personal income tax will apply when assets are transferred into trusts and annually on generated income, closing a long-standing loophole used by wealthy families to shield wealth from taxation.
The move follows a broader crackdown on offshore wealth and aims to ease fiscal pressures amid a prolonged property market downturn. Hong Kong, now the world’s largest offshore wealth hub, is expected to face significant implications, with hundreds of billions of USD in assets potentially affected.
To encourage compliance, authorities offered a 90-day window for individuals to declare assets transferred between 2023 and 2025 and settle tax liabilities. Income generated by trusts before 2026 will also be subject to retroactive taxation.