ECONOMY

China Issues Detailed 20% Tax Guidance on Offshore Trusts

Published: Jul. 25, 2026 1:08 a.m. GMT+8

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The move follows broader efforts over the past two years to strengthen collection of tax on residents’ overseas income. Photo: VCG

China has issued detailed tax rules for offshore trusts, clarifying that a 20% personal income tax applies at the establishment, operating and liquidation stages of these wealth-management vehicles.

The measures, released on Friday by the Ministry of Finance and the State Taxation Administration, are intended to narrow loopholes that have enabled some wealthy individuals to use low-transparency jurisdictions to conceal assets and avoid tax.

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China's new rules impose 20% tax on offshore trusts at creation, operation, and liquidation.
They target wealthy individuals using low-tax jurisdictions to conceal assets and evade tax.
Retroactive enforcement covers three years, with unpaid taxes due within 90 days from July 2026.

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Who’s Who

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What Happened When

Before January 1, 2023：: Assets transferred into offshore trusts before this date may be subject to retroactive tax collection for unpaid taxes related to trust establishment, but only for the past three years as per the new rules.

Since January 1, 2023：: Assets transferred into offshore trusts from this date onward are subject to retroactive tax collection for unpaid taxes related to trust establishment, with authorities able to look back further for larger sums.

By 2025：: Unpaid tax on income distributions from offshore trusts, covering years up to and including 2025, will be calculated on a consolidated basis and taxed at 20%.

From July 24, 2026：: Taxpayers have 90 days starting from this date to settle outstanding tax liabilities on income distributions from 2025 and earlier.

By the past two years (as of the article's publication)：: Broader efforts began to strengthen collection of tax on residents' overseas income, including gains from trading U.S. and Hong Kong stocks, aided by the Common Reporting Standard.

Friday (the day the article was released)：: The Ministry of Finance and the State Taxation Administration released detailed tax rules for offshore trusts, clarifying a 20% personal income tax applies at establishment, operation, and liquidation stages.

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