China introduces personal income tax on offshore trusts to close loopholes
China has introduced new tax rules targeting offshore trusts used by wealthy individuals to avoid taxation, according to a report from the South China Morning Post. The Ministry of Finance announced that gains in asset values placed into these trusts will now be subject to immediate personal income tax, with ongoing annual taxes on trust-generated income. This move aims to close loopholes and address fiscal pressures caused partly by a prolonged downturn in domestic housing prices. The policy change is expected to significantly impact Hong Kong, which has become the world's largest offshore wealth center after surpassing Switzerland. The government also introduced a 90-day grace period for individuals who transferred assets between 2023 and 2025 to declare holdings and settle taxes under simplified structures. The tax overhaul comes amid broader fiscal challenges faced by both Beijing and local governments due to slowing economic growth and housing sector issues. Recent audits revealed tax evasion at state-owned financial institutions, further highlighting the need for tighter oversight.
Topics: offshore_trusts personal_income_tax wealth_management