The Chinese government has introduced new tax regulations imposing a 20% tax at nearly every stage of a trust's life, requiring families to declare and pay taxes owed on assets moved into trusts since the start of 2023 by October 22.
This deadline has triggered a rush among wealthy Chinese families to consult lawyers and private bankers.
"This is a watershed moment for China-linked private wealth planning," said a Singapore-based lawyer.
Last week, China's Ministry of Finance and tax authorities issued the clearest rules yet on how these trusts should be taxed.
Now, a 20% levy will be collected at nearly every stage of a trust's life, from establishment to profit distribution and termination.
Many clients, still in shock, have been calling from wealthy families, private banks, trust companies, and insurers.
The Chinese government is looking for new sources of fiscal revenue, as land sales, which used to be a major contributor, have collapsed.
Local tax bureaus have begun inspecting offshore trusts and applying 20% levies in select cases.
