The intensifying campaign against offshore capital taxation is prompting wealthy citizens in China to reassess their trust structures and investment assets, several lawyers and consultants have told Reuters. Beijing is tightening control over capital outflows and compliance with tax regulations amid a growing budget deficit.
As Reuters reminds, at the end of July, authorities revised rules stating that a 20% tax will be levied on the increase in value when transferring shares, real estate, or other assets to offshore trusts. Income derived from such trusts and offshore entities they control will also be taxed at a rate of 20% annually.
From January 2023, unpaid taxes on assets transferred to trusts, as well as taxes on income from trusts until 2026, must be declared within 90 days.
These measures have forced some wealthy citizens to urgently evaluate their tax obligations, mobilize resources to settle them, and reassess their investment structures. These initiatives have also heightened concerns that Beijing may expand tax pressure and control over offshore capital.
