China Enforces 20 Percent Tax on Offshore Trusts and Wealth Assets

Chinese authorities have intensified tax enforcement against wealthy individuals and offshore holdings during 2026, extending scrutiny to offshore trusts, foreign investments, and income earned outside mainland China, according to a report published by Dainik Jagran English.

Under rules introduced in July, transfers of shares, real estate, and other assets into offshore trusts held by Chinese tax residents face a 20 percent tax on applicable gains. Income generated by the trusts and the offshore entities they control is also subject to a 20 percent tax, with enforcement covering unpaid liabilities dating back to January 2023.

Affected taxpayers have been granted a 90-day period to report and settle qualifying tax liabilities without additional late-payment charges, establishing an October 22 deadline. The campaign extends beyond trusts, as tax offices in cities including Beijing and Hangzhou have also begun enforcing taxes on income derived from offshore insurance policies.

The source report states that fiscal pressure is a primary driver behind the enforcement push, as China's property market downturn has reduced local government revenue traditionally generated from land sales. Tax authorities have also gained greater visibility into overseas holdings through domestic administrative systems and international data exchanges under the Common Reporting Standard.

The report notes that meeting these liabilities presents liquidity risks for wealthy individuals whose assets are concentrated in non-cash holdings such as shares or property. In September, a major shareholder of Chinese restaurant chain Haidilao sold 259 million shares valued at approximately HK$2.75 billion (roughly $350 million), though the official rationale for the transaction was not disclosed publicly.