China has set out how it will tax offshore trusts used by its residents. On 24 July 2026, the Ministry of Finance and the State Taxation Administration issued Announcement 2026 No. 21 on individual income tax for offshore trusts, which took effect on the day it was published.
In September, Singapore's government told Parliament that banks had seen no significant impact so far. Here is what the rules require, and what both cities have said about their wealth sectors.
Why Beijing acted
In an official Q&A published the same day, officials from the Ministry of Finance's tax policy department and the State Taxation Administration's income tax department said some individuals use offshore trusts for inheritance planning, cross-border asset allocation and risk management. Because these trusts are often based in places with low tax and little transparency, the officials said, some people also use them to move assets, hide wealth and evade tax. China taxes its residents on worldwide income, and the announcement spells out how that principle applies to trusts.
How the tax works
The rules cover each stage of a trust's life. For setting up, running and ending a trust, the Q&A puts the rate at 20%.
- Setting up the trust. A Chinese resident who moves assets such as company shares or property into an offshore trust is taxed as if the assets had been sold. The taxable amount is the market value at the time of transfer, minus the original cost and reasonable expenses.
- While the trust runs. Income earned by the trust, and by offshore entities it holds or controls, is taxed every year on the resident who funded it, whether or not any money is paid out. Trustee fees, management fees, legal fees and investment advisory fees cannot be deducted.
- When the trust ends. On termination, the gain on all trust assets at liquidation is taxed as interest, dividends and bonuses.
- Leaving China or death. A resident who becomes a non-resident is taxed on the trust's built-up gain on that day. If a resident dies and the trust passes to a non-resident, or to no one, the trustee or a mainland entity it appoints must file and pay.
Payouts also count. When a trust funded by a non-resident pays income to a Chinese resident, that resident is taxed on it. Tax already paid abroad on the same trust income can be credited.
Closing the obvious routes around it
The announcement includes several anti-avoidance provisions that compliance and private banking teams will recognise:
- People who hold a foreign passport or long-term or permanent residence abroad can still be treated as domiciled Chinese residents if their main economic interests are in China.
- Assets moved through another person or organisation are treated as transferred by the individual who actually funded or controls them.
- Benefits such as loans, guarantees, paid expenses or free use of trust assets are treated as distributions to a related resident.
- Offshore entities without real substance, judged by tests including the share of passive income and whether they have genuine staff, premises and decision-making, fall within the rules. Licensed banks, insurers and securities firms that serve the general public are not treated as such entities, and the financial products they issue fall outside the definition of an offshore trust.
- Where residents and non-residents fund the same trust, the whole trust is treated as funded by the resident.
A 90-day window for past trusts
The rules look back. Residents who moved assets into offshore trusts between 1 January 2023 and 31 December 2025 must declare and pay the unpaid tax within 90 days of the announcement taking effect on 24 July, around 22 October 2026, with no late-payment surcharge. Trust income from before 2026 is bundled together and taxed as interest, dividends and bonuses within the same window. Where the unpaid amount is large, the tax authority may extend the recovery period beyond three years. After the window, late payment surcharges and penalties apply, and cases of tax evasion will be pursued.
The State Taxation Administration followed with Announcement 2026 No. 15 on administration. It sets the annual filing season from 1 March to 30 June, lists the documents taxpayers must file the first time, including the trust deed, an asset list and the trust structure, and allows instalments over up to five years in some cases. It also requires trustees to keep accurate accounts of trust income and distributions and to help taxpayers file. The Q&A warns that intermediaries found steering taxpayers into offshore trusts to evade tax will be dealt with under the tax collection law.
Singapore: no significant impact so far
Three Members of Parliament, Saktiandi Supaat, Louis Chua and Yip Hon Weng, asked about the effect on Singapore's wealth management and trust industry. Deputy Prime Minister Gan Kim Yong, Chairman of the Monetary Authority of Singapore (MAS), answered in a written reply recorded in the official Hansard for 8 September 2026.
"Key banks in the wealth management industry have told MAS that they have not observed significant impact from China's tax rules thus far, and clients are assessing the implications of China's new measures and the steps needed to meet their tax obligations."
Gan Kim Yong, Deputy Prime Minister and Chairman, Monetary Authority of Singapore
He pointed to continued growth, with assets managed in Singapore up 10.1% in 2025 to S$6.7 trillion. For family offices, he said, MAS has recently reworked its fund tax incentive schemes so they are more flexible and cheaper to comply with, and cover more kinds of investment. That follows other MAS measures to anchor asset managers announced in August. On Louis Chua's question about information sharing, he said the Common Reporting Standard covers financial account information, not real estate or other immovable property.
Singapore's family office base is large. At the end of 2025, over 2,000 single family offices were benefiting from Singapore's section 13O and 13U fund tax incentives, according to a separate parliamentary reply on 5 August 2026. Most of the families behind them come from the Asia Pacific, with Europe and the Americas next.
Hong Kong's family office growth
Hong Kong has been growing its own base. A Deloitte market study commissioned by Invest Hong Kong counted more than 3,380 single family offices in the city at the end of 2025, roughly 680 more than two years before, a rise of over 25%. The Financial Services and the Treasury Bureau and Invest Hong Kong published the figures on 10 February 2026.
What compliance teams should watch
The tax falls mainly on Chinese-resident individuals, and trustees must file only in specific cases, such as after a settlor's death. But the rules give trustees a defined role in record-keeping and filing support, and the Q&A makes clear that Chinese authorities are watching intermediaries. For trust companies, private banks and family office service providers with Chinese-resident clients, the practical steps are to:
- identify trusts and underlying holding entities with settlors or beneficiaries who may be treated as Chinese residents, including foreign passport holders whose main economic interests remain in China;
- check that trust accounts can separate income by type and tax year, as the rules require;
- review whether loans, guarantees or expense payments to related parties could be treated as distributions;
- be ready for client requests for documents before the 90-day deadline in late October.
Singapore's position is that the impact has been limited so far, with clients still assessing what the rules mean for them. The first full annual filing season under the new rules opens on 1 March 2027.
