Tax supervision "piercing through" offshore trusts: Which types of income are subject to taxation?

**　　【Caixin.com】** Chinese tax authorities in some local jurisdictions are stepping up tax audits of offshore trusts, requiring the relevant trust owners to report detailed information on investment gains such as dividends and gains from the disposal of shares. Several tax attorneys confirmed this to Caixin.com. This means that offshore structures, which for a long time have been seen as a gray area in tax enforcement, are now facing tighter tax supervision.

According to a Bloomberg report citing people familiar with the matter, relevant departments in provinces and cities including Jiangsu and Shenzhen have already required the owners of these trusts to file detailed financial information, including investment gains such as dividends and gains from the disposal of shares, while Shanghai began requesting information on the past two years’ earnings from the start of 2025. Some local tax authorities are seeking to levy 20% tax on investment gains and impose additional penalties; in addition, relevant authorities in another province are requiring the disclosure of earnings obtained from offshore trusts over the past two years.