Wealthy Chinese race for tax advice as Beijing targets offshore trusts

Offshore trusts have long been used by China’s ultra-rich to tuck away hundreds of billions of dollars outside the country. Now, a move by Beijing to tax them has set off a rush to lawyers and a scramble for cash.

For decades, the legal structure has been a favored vehicle of Chinese tycoons to hold everything from pre-IPO stakes to family fortunes — and their tax treatment in China was never spelled out. But on July 24, China’s Ministry of Finance and tax authority issued the clearest rules yet on how they should be taxed.

Now a 20% levy will be collected at nearly every stage of a trust’s life, from establishment to profit distribution and termination. Families need to declare and pay outstanding amounts on assets transferred into such trusts since the start of 2023 by Oct. 22 — a total window of 90 days. Late declarations or non-payments could incur surcharges. 

That countdown has set off a scramble across Hong Kong and Singapore, popular destinations for China-linked families to set up trust structures. 

“Many clients, trustees, and advisors are still in shock,” said Clifford Ng, a Hong Kong-based partner at Zhong Lun law firm.

Calls have poured in from wealthy families, private banks, trust companies, and insurers, said Kia Meng Loh, chief operating officer and senior partner at Singapore-based law firm Dentons Rodyk. People want to know whether they are affected by the new rules, how large the tax bill might be, and how to settle it before the grace period expires, he said, adding that some are already weighing which assets to sell. 

“This is a watershed moment for China-linked private wealth planning,” Loh added. 

For an industry built on decades of Chinese money, the sums potentially involved are massive. Assets held under trusts in Hong Kong alone reached HK$5.2 trillion ($667 billion) in 2023, with 55% of the underlying investments located in mainland China and Hong Kong, according to a report by KPMG and the Hong Kong Trustees’ Association, which called the mainland the industry’s most significant growth driver.

Singapore, along with the British Virgin Islands and the Cayman Islands, has been favored as another legal hub for Chinese high-net-worth families to hold offshore assets. KPMG found some clients see less political risk in the city-state than in Hong Kong, according to a report released in 2025. 

“Wealth owners from a diverse range of countries choose Singapore for many reasons, including our high standards of regulation, strong rule of law, and a comprehensive ecosystem of wealth managers and professional service providers,” a Monetary Authority of Singapore spokesperson told CNBC.

Hong Kong’s Financial Services and the Treasury Bureau said the government would continue to strengthen the city’s position as an international asset and wealth…