Chinese tax impact hits financial firms
Beijing has imposed a 20% tax on foreign trust funds starting from July 2026, triggering a significant shock among wealthy Chinese who used these funds to stash hundreds of billions of dollars abroad. This move comes as part of the Chinese government's efforts to increase revenue, especially amid declining land sales and an economic downturn. The new law requires the disclosure of assets held in these funds since the beginning of 2023 and the payment of the tax before the October 22 deadline, prompting China's wealthy to seek solutions through consulting lawyers and selling assets to generate liquidity. Singapore and Hong Kong remain popular destinations for affluent Chinese families to establish offshore structures, but current taxes could lead to widespread selling and asset liquidation to settle the tax, which could amount to billions of dollars.
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