BEIJING, July 24 — China will impose individual income tax starting today on assets placed in offshore trusts and the income they generate, closing a loophole long used by wealthy citizens to shield fortunes abroad.
Such offshore trusts have long been a gray zone in Chinese tax enforcement, and the move is Beijing's latest effort to capture revenue from wealth its citizens hold overseas.
In a joint statement, the Finance Ministry and the State Taxation Administration said that the new rules levy a tax of 20 per cent on the appreciation in value at the time of transfer of shares, property or other assets into offshore trusts.
They added that the income from such trusts and offshore entities they control will be taxed annually at 20 per cent, but gave no estimated of the funds held overseas.
The rules feature sweeping anti-avoidance provisions. Those who become foreign citizens or overseas permanent residents but retain their main economic interests in China may still be treated as Chinese tax residents.
Unpaid taxes on assets placed in trusts since January 2023, and on trust income received before 2026, must be settled within 90 days to avoid penalties for late payment.
Larger unpaid amounts could face an extended recovery period, while evasion could lead to back taxes, surcharges, and fines.
