Chinese Investors Face 20% Tax Bill on Offshore Trading Profits
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Since 1980, China tax residents have been required to report global income — including salaries, dividends and capital gains
China is stepping up enforcement of its long-standing tax rules on overseas investments, a move that indicates deeper scrutiny of the country’s expanding class of global retail investors.
Tax authorities across the country have begun proactively contacting individuals who trade U.S. and Hong Kong stocks, instructing them to declare their income and settle tax liabilities.
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- China is actively enforcing existing tax rules on overseas investments, targeting individuals trading foreign stocks and instructing them to declare global income.
- Enforcement has increased since mid-2024, aided by cross-border data sharing under the Common Reporting Standard (CRS); a 20% tax applies to dividends and annual net stock trading profits.
- Legal obligations have existed for decades, but detailed guidance remains limited, and questions about loss carryforwards and other taxation specifics persist.
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Who’s Who
- King & Wood Mallesons
- King & Wood Mallesons is a commercial law firm. A partner at the firm, Ye Yongqing, noted a significant increase in client inquiries regarding the taxation of foreign income since mid-2024.
- M&T Lawyers
- Wu Libin is the director of M&T Lawyers in Beijing. Wu Libin states that the current tax law for overseas investments lacks detailed guidance and clarity on certain key aspects, such as whether individuals can carry forward overseas investment losses.
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What Happened When
- Since 1980：
- China tax residents have been required to report global income, including salaries, dividends, and capital gains.
- 1997：
- Capital gains from trading A-shares listed in mainland China have been exempt from personal income tax.
- 2017：
- Beijing joined the Organisation for Economic Co-operation and Development’s Common Reporting Standard (CRS).
- 2018：
- China began sharing information under the CRS and the rule to report global income was reaffirmed in a major update of China’s Personal Income Tax Law.
- By mid-2024：
- Ye Yongqing, a partner at King & Wood Mallesons, observed a surge in client queries about foreign income taxation.
- 2024-2025：
- Enforcement of long-standing tax rules on overseas investments became more visible due to improved cross-border coordination and better access to financial data.
- 2025：
- Chinese tax authorities began proactively contacting individuals trading U.S. and Hong Kong stocks, instructing them to declare income and settle tax liabilities.
- 2025：
- A financial blogger known as 'Maobidao' posted online about receiving repeated phone calls from Beijing’s tax office regarding overseas earnings.
- 2025：
- Tax authorities clarified individuals will be taxed on net annual gains from overseas investments, rather than per-transaction profits.
- 2025：
- The crackdown and new enforcement efforts around taxation of overseas investment income drew significant public attention and discussion.
- 2025：
- Confirmation that tax liability on net investment gains applies was provided by Beijing’s tax service hotline.
- 2025：
- Authorities focused on further overseas earnings, including employee stock-ownership plans and dividends from international holdings.
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