China's Ministry of Finance and tax authority issued rules on July 24 regarding the taxation of offshore trusts. The policy introduces a 20% levy to be collected at nearly every stage of an offshore trust's life, including establishment, profit distribution, and termination.
Assets transferred into offshore trusts since the start of 2023 must be declared and any outstanding amounts paid by Oct. 22, providing a 90-day window. The policy announcement stated that individuals can apply for installment terms with local tax bureaus to pay the tax sum over five years. Late declarations or non-payments regarding the new trust tax rules could incur surcharges.
Local tax bureaus in Shanghai, Shenzhen, and Jiangsu had begun inspecting offshore trusts and applying 20% levies in select cases before the national rules were released. China has been participating in the Common Reporting Standard (CRS) since 2018, which allows for the exchange of offshore financial account information with Chinese tax authorities. Richard Grasby, a partner at offshore law firm Appleby in Hong Kong, said taxable amounts submitted to Chinese authorities must match figures shared with Beijing via the CRS.
Many clients, trustees, and advisors are still in shock.
The impact on private wealth planning has been described by Kia Meng Loh, chief operating officer and senior partner at Singapore-based law firm Dentons Rodyk, as 'a watershed moment for China-linked private wealth planning.' In response to the tax, Ryan Lin, a director at Singapore's Bayfront Law, said most clients are saying they will liquidate some of their portfolio to pay the tax.
The retrospective 90-day window could lead to forced or pre-emptive stake reductions to fund compliance.
Market analysts suggest the tax may cause temporary volatility. Dominic Chiu, a senior analyst at Eurasia Group, expects one-off, episodic selling pressure rather than a sustained market crash.
Regional wealth shifts
In the first half of 2026, individual income-tax revenue in China increased by 13.1%.
Assets held under trusts in Hong Kong in 2023, according to a report by KPMG and the Hong Kong Trustees' Association.
According to a report by KPMG and the Hong Kong Trustees' Association, 55% of the underlying investments in Hong Kong trusts are located in mainland China and Hong Kong. A 2025 report by KPMG also found that some clients see less political risk in Singapore than in Hong Kong.
A spokesperson for the Monetary Authority of Singapore told CNBC that wealth owners choose Singapore for reasons including high standards of regulation, strong rule of law, and a comprehensive ecosystem of wealth managers.
