Reuters, HONG KONG and SINGAPORE
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A growing campaign to tax offshore wealth is forcing wealthy Chinese people to rethink their trust structures and investment holdings, lawyers and advisors say, as Beijing sharpens its focus on capital outflows and rule enforcement amid growing fiscal strains.In late last month, authorities overhauled rules to impose a 20 percent income tax on offshore trusts, while tax offices in major cities like Beijing and Hangzhou have started to enforce taxation on returns from offshore insurance policies.Those measures have triggered a scramble among some wealthy individuals to assess their liabilities, raise cash to meet them and revamp investment holdings. They have also fueled concern that Beijing may widen its tax crackdown and scrutiny of offshore wealth.
Buildings in Pudong’s Lujiazui financial district in Shanghai, China, are pictured on May 18.
At stake is a collection of capital worth up to US$1.2 trillion held by mainland Chinese ultra-high-net-worth individuals, according to a report from Boston Consulting Group earlier this year, that is parked in markets including Hong Kong, Singapore and other low-tax jurisdictions.More than half of China’s super-rich individuals use offshore family trusts to manage their wealth, reports from Julius Baer Group and KPMG showed, translating into hundreds of billions of dollars in assets.
