Today, a set of figures from the State Taxation Administration shocked me:
So far, wealthy people in China have collectively declared more than 160 billion yuan in individual income tax on offshore trusts.
Of that amount, over 120 billion yuan was collected in October alone, driving an increase of nearly 90% in the country’s individual income tax revenue that month.
China’s wealthy really have been aggressive about avoiding taxes.
This all began on July 24 this year, when the Ministry of Finance and the State Taxation Administration issued the “Announcement on Matters Concerning Individual Income Tax on Offshore Trusts.”
It stipulated that taxpayers who receive income from offshore trusts could file their returns and pay the tax within a 90-day transition period without being charged late fees.
As everyone knows, many wealthy people in China have avoided taxes by setting up special-purpose vehicles (SPVs) overseas or changing their citizenship.
Now that avenue has been shut down completely.
So a bunch of wealthy people started selling off shares to cover their tax bills. The most notable example is Haidilao’s Zhang Yong and his wife, whose sales also caused Haidilao’s share price to plunge 10% in a single day.
For a few days, the entire Hong Kong stock market was even dragged down by this.
Some things seem insignificant until you put them on the scales—then you realize they weigh far more than you’d ever expect.
For now, most wealthy people seem to be cooperating. As for the few who aren’t, we’ll see how they’re dealt with going forward.
So far, wealthy people in China have collectively declared more than 160 billion yuan in individual income tax on offshore trusts.
Of that amount, over 120 billion yuan was collected in October alone, driving an increase of nearly 90% in the country’s individual income tax revenue that month.
China’s wealthy really have been aggressive about avoiding taxes.
This all began on July 24 this year, when the Ministry of Finance and the State Taxation Administration issued the “Announcement on Matters Concerning Individual Income Tax on Offshore Trusts.”
It stipulated that taxpayers who receive income from offshore trusts could file their returns and pay the tax within a 90-day transition period without being charged late fees.
As everyone knows, many wealthy people in China have avoided taxes by setting up special-purpose vehicles (SPVs) overseas or changing their citizenship.
Now that avenue has been shut down completely.
So a bunch of wealthy people started selling off shares to cover their tax bills. The most notable example is Haidilao’s Zhang Yong and his wife, whose sales also caused Haidilao’s share price to plunge 10% in a single day.
For a few days, the entire Hong Kong stock market was even dragged down by this.
Some things seem insignificant until you put them on the scales—then you realize they weigh far more than you’d ever expect.
For now, most wealthy people seem to be cooperating. As for the few who aren’t, we’ll see how they’re dealt with going forward.
