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CN MOF, STA Clarify Offshore Trusts Subject to Taxation
2026-07-24 17:57:36 China's Ministry of Finance (MOF) and the State Taxation Administration (STA) issued an announcement today (24th) clarifying matters related to individual income tax on offshore trusts. According to the announcement, income generated from residents placing assets into offshore trusts and during the existence of offshore trusts must be declared and individual income tax paid in accordance with regulations. The announcement separately clarifies individual income tax matters for the establishment, renewal and termination stages of offshore trusts. For example, during the establishment stage, when a resident individual places assets into an offshore trust, the taxable income will be the balance after deducting the original asset value and reasonable expenses from the market value of the injected assets. Individual income tax will be levied under "income from property transfer" at a tax rate of 20%. During the renewal stage, income generated from offshore trusts holding assets injected by resident individuals will be taxed annually based on the nature of the income under "income from property transfer" and "interest, dividends and bonus income", with a tax rate of 20%. At the same time, the announcement clarifies matters related to taxpayers' filing procedures and sets out provisions for declaration and payment of unpaid taxes for offshore trusts established before the release of the announcement. According to the announcement, offshore trusts established for more than three years will no longer be subject to back taxes for the establishment stage. Income generated during the renewal stage must be declared regardless of the establishment date, but a three-month grace period for filing will be provided, during which late payment surcharges will be waived. Experts said the clarification by the two departments regarding individual income tax matters for offshore trusts adapts to the currently more mature tax collection and administration conditions, helping improve tax certainty and transparency and stabilize taxpayer expectations. It is also conducive to promoting social fairness and safeguarding national interests. ~ AASTOCKS Financial News Website: www.aastocks.com | |