China targets offshore trusts – including Hong Kong – amid tax overhaul - South China Morning Post

What the report says

South China Morning Post reported that China is tightening tax treatment of offshore trusts used by wealthy families, including structures often set up in Hong Kong, as Beijing seeks to close perceived loopholes and raise revenue during a period of slower growth and heavier fiscal pressure. The report said the Ministry of Finance issued a statement on Friday, with the rules taking effect immediately.

Under the changes described by the ministry, personal income tax will apply when assets such as shares or property are first placed into offshore trusts and have appreciated in value. Income produced by those trusts will also be taxed each year. The move expands official scrutiny of overseas wealth arrangements used by some mainland families for asset management, succession planning and tax planning.

The newspaper linked the enforcement push to a recent inheritance dispute involving the family of Zong Qinghou, the late founder of Wahaha Group, who died in 2024. In that case, three children born outside marriage sought to freeze a multibillion-dollar offshore trust controlled by a half-sibling, bringing wider attention to how large fortunes may be held outside the mainland.

SCMP also cited Karen Cheung, a partner at law firm HFW, who said the rules are likely to push families with cross-border assets to reassess their structures and focus more on compliance, transparency and governance rather than only tax efficiency. The development matters because it signals a broader effort by Beijing to bring offshore wealth vehicles within the personal tax system and strengthen oversight of high-net-worth taxpayers.