If you have an 'offshore trust' that shelters assets from China or even aids succession planning, you need to know about some new MOF and STA enforcement rules

Have you moved here from China at some point? Recent changes to Chinese tax law may impact you even if you have citizenship here.

The always excellent Bill Bishop has produced a note which may be useful. Follow his link.

On Friday the Ministry of Finance and State Taxation Administration issued the “Announcement on Matters Concerning Individual Income Tax on Offshore Trusts (MOF and STA Announcement No. 21 of 2026)”, translated here.

If you are a PRC tax resident, Beijing wants to tax the trust as though the assets and income are still yours. Moving property into an offshore trust can itself create a taxable gain. After that, the trust’s income, including income earned through offshore companies it owns or controls, is taxable every year even if nothing is distributed.

The provision that may cause the most anxiety is the one saying foreign citizenship or permanent residence abroad does not necessarily let you avoid the tax. If a person’s “principal economic interests” remain in China, the tax authorities may still treat that person as domiciled there.

There is a 90-day window to clean up certain unpaid taxes going back to January 1, 2023 without late-payment surcharges.

Lots of people have received or will soon receive calls asking them to declare assets in overseas trusts and pay back taxes for the last three years, if not longer if the numbers are really large. On the one hand, the authorities are closing a loophole to enforce existing law, on the other this is another move in the tightening of control over the flow of money offshore, and will probably not help confidence.