On October 22nd, the tax deadline was closing, and the Chinese wealth in the offshore trust began to search for cash.

The Chinese rich are doing something quite similar to the average shareholder: selling stocks and raising cash. But this time they were forced to recalculate the account balance, not by stock market fluctuations, but by a schedule for tax returns. On 24 July, the Ministry of Finance and the National Tax Administration of China issued new rules on the income tax of individuals on offshore trust, which provide for a 90-day transitional declaration period for some historical income. Around 22 October, the wealth permanently stored in offshore trust structures had to face new tax bills. The challenge for families with hundreds of millions of assets may not be whether or not they can pay taxes, but where the cash is.

The offshore trust was initially considered by the founders of a number of Chinese listed enterprises as a cross-generational inheritance and asset protection tool. The founders place shares, cash or other property in trust in jurisdictions such as Hong Kong and the British Virgin Islands, and are administered by the trustees in accordance with the contract. This arrangement does not necessarily violate the law or amount to total tax evasion, but it can place equity, distribution of income and family inheritance in a more complex structure than the personal accounts of the country. When the policy environment is stable, the arrangement appears to be a wall of risk isolation; When the tax authorities change their way of finding, it may become a book that must be opened.

Reuters News, October 16th.Financial advisers, lawyers and practitioners are receiving intensive consultations: some high-value net-value clients are beginning to end their trust, sell their shares, borrow money to raise taxes and even consider changing their tax resident status. Oscar Liu, head of JLT Legacy Group, noted that the pressure on the founders of the trust, which was established with shares of companies listed abroad, was particularly high between 2014 and 2020.Those shares have a book value.The government has also been able to sell the goods at the best price in a short time. If the time for paying taxes is fixed, entrepreneurs may be forced to trade for cash at a liquidity discount.

This time, it was not the tax authorities who suddenly found out that offshore banks had money. The rules governing the administration of the Tax Administration Authority have been refined to allow tax authorities to request the corresponding information from taxpayers, by making the procedures for tax authorities, changes in residence status, declaration of proceeds and liquidation of trust. Reuters quoted a description of local teams looking for potential tax users by reference to the Rich Man's List, disclosure documents by listed companies, etc. The change in equity disclosed by a company in Hong Kong and the trust arrangement that an entrepreneur had had for many years now might now be combined into a retroactive tax trail.

The most valuable analysis is the tax boundary and power relations. For regular wage families, personal income tax is usually withheld at the time of payment of wages; For those with a high concentration of wealth, income may be distributed in different forms before entering a stock-holding platform, offshore companies or family trusts. (b) Requires those with high net value to bear taxes in accordance with the law and to have the proper public financial standing; However, when tax changes involve historical transactions, beneficial attribution and identification of residents, the power of interpretation is highly concentrated in the tax authorities, and the question of how the taxpayer disputes and who decides independently becomes another level of institutionality.

Proclamation No. 21 of 2026Special treatment of partial historical incorporation of the act of trust from 2023 to 2025 and of the benefit of the trust until 2026;Proclamation No. 15Details of offshore trust administration are also provided. The usual 20 per cent income tax rate does not apply to every trust property, every transfer and all personal status without distinction. It is the many years of transactions that have been made to make the rich eager to sell their assets, and the figures in the accounts are not yet ready to be translated into taxable taxes.

Beijing faces local fiscal constraints, weak domestic demand and anxiety about capital flight, tracking offshore wealth while increasing fiscal revenues, demonstrating tax equity and enhancing the management of cross-border assets. For the general public, there are two different expectations: that people with professional advisers and sophisticated tools cannot be allowed to avoid taxes more easily than wage earners, and that taxes cannot be allowed to become arbitrary power to change family property arrangements on the sole basis of administrative judgement. On 22 October, when the check book was opened, it was the rich who opened it; What is truly worth asking is whether the State, after regaining control of the money, can make the distribution of public wealth more transparent and equitable.