Key facts
- Some of China's richest people are winding down offshore trusts and selling shares.
- Tax officials are stepping up efforts to gather information on wealthy individuals and collect taxes on offshore incomes.
- Founders of Hong Kong- and U.S.-listed Chinese firms are expected to be most affected.
- Tax payable in a single case could range from millions to billions of yuan.
- Banks are lending to private clients to cover tax bills, secured against shares.
- Some wealthy individuals are confused by unclear aspects of the new tax rules.
Some of China's wealthiest individuals are rushing to wind down offshore trusts and sell assets as a deadline looms to declare overseas income, according to wealth advisers and lawyers. The move is part of increased scrutiny of capital outflows and rule enforcement amid China's economic challenges. Tax officials have established dedicated teams to collect taxes on offshore incomes, with potential liabilities ranging from millions to billions of yuan for founders of Hong Kong- and U.S.-listed Chinese firms who sold shares through trusts between 2014 and 2020. Boston Consulting Group estimates China's offshore wealth at approximately $1.7 trillion. The new tax rules, which require individuals to calculate their own tax due by October 22, have created confusion regarding coverage targets, retroactive application, and payment logistics, though enforcement may vary by city.