Announcement on Matters Concerning Individual Income Tax of Offshore Trusts Announcement on Tax Administration Matters Concerning Individual Income Tax of Offshore Trusts

Issued by:	Ministry of Finance (MOF), State Taxation Administration (STA)
Issue No.:	Announcement No. 21 [2026] of MOF and STA; Announcement No. 15 [2026] of STA
Release Date:	July 24, 2026
Effective Date:	July 24, 2026
Links:	https://fgk.chinatax.gov.cn/zcfgk/c102416/c5251277/content.html https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251338/content.html

On July 24, 2026, the Ministry of Finance and the State Taxation Administration jointly issued the Announcement on Matters Concerning Individual Income Tax on Offshore Trusts (the “Announcement No. 21"). The core of this Announcement is to comprehensively bring the income of offshore trusts (including foreign trusts or foreign legal arrangements with trust functions) within the scope of China's Individual Income Tax ("IIT"), covering the entire life cycle of "establishment – existence – termination", and applying a uniform tax rate of 20%.

On the same day, the State Taxation Administration issued the supporting Announcement on Tax Administration Matters Concerning Individual Income Tax of Offshore Trusts (the "Announcement No. 15"), which specifies the detailed filing rules and implementation measures. The main contents of the two Announcements are as follows:

1. Full Lifecycle Coverage

The Announcements divide the tax treatment of offshore trusts into three key stages, specifying the tax rules and filing deadlines for each:

Trust Period		Resident Individual	Non-Resident Individual
Establishment (Asset Transfer into Trust)	Taxpayer	The resident individual who transfers assets into the trust.	The non-resident individual who transfers the assets into the trust. However, if the assets are actually controlled by a resident individual, the situation shall be treated as if it were a resident individual case.
	Tax Calculation Method	IIT is levied on "income from property transfer". Taxable income = Market value of the asset at the time of transfer – Original value of the asset – Reasonable expenses. After taxation, the original value of the asset is adjusted to the market value at the time of transfer.	IIT is calculated and paid only on income from transfer of property sourced within China using the same method as left.
	Filing Deadline	March 1 to June 30 of the following year.	Within 15 days of the following month.
Existence (Trust Income)	Taxpayer	The resident individual who transferred assets into the trust.	Resident individuals who receive distributions from the trust. If a non-resident receives a distribution but a resident individual effectively enjoys or controls the income, it is deemed distributed to that resident individual.
	Tax Calculation Method	Comprehensive taxation: All income generated during the existence of the trust and its controlled overseas entities, regardless of whether actually distributed, must be taxed annually:	Limited taxation: Only income actually distributed to resident individuals by the trust is subject to IIT, calculated as "interest, dividends, and bonus income".
		Income from property transfer: Annual gains and losses can be offset, but losses cannot be carried forward to subsequent years.
		Interest, dividends, and bonus income: Calculated based on the total of all other types of income (excluding property transfer income) for the year. The two types of income cannot be offset against each other. Trust management fees, trustee remuneration, etc., are not deductible. Taxed income, when actually distributed, shall not be taxed again.
	Filing Deadline	March 1 to June 30 each year, reporting income for the previous year.	March 1 to June 30 each year, reporting income received from distributions in the previous year.
Termination (Trust Liquidation)	Taxpayer	The resident individual who transferred assets into the trust.	The resident individuals who receive trust property.
	Tax Calculation Method	The liquidation income of the entire trust property (Market value – Original value – Reasonable expenses) taxed as "interest, dividends, and bonus income". Income generated in the year of termination must first be reported according to the rules for the existence stage.	The market value of the trust property at the time of termination taxed as "interest, dividends, and bonus income".
	Filing Deadline	Within 15 days of the month following the completion of liquidation. If liquidation is not completed within 60 days, the 60th day is deemed the liquidation completion date.	Same as left: Resident individuals receiving trust property must file within 15 days of the month following the completion of liquidation.

2. Special Circumstances

The Announcements specify the tax treatment for certain special circumstances occurring during the existence of the offshore trust:

Special Circumstance	Circumstance 1: Change of status from resident individual to non-resident individual Circumstance 2: Death of the resident individual, and the trust is inherited by or left to a non-resident individual, or there is no inheritor
Taxpayer	Circumstance 1: The resident individual whose status changed Circumstance 2: The trustee files on behalf of the trust
Tax Calculation Method	Tax is calculated based on the market value of the trust property on the date of the event (change/death) minus the original value, taxed as "interest, dividends, and bonus income". Income generated in the current year and previous years must be reported according to the rules for the existence stage. After tax payment, the original value of the property is adjusted to the market value on the date of the event, and subsequent rules for non-resident individuals apply.
Filing Deadline	Within 15 days of the month following the event.

3. Anti-Avoidance Arrangements

Announcement No. 21 establishes several anti-avoidance measures, primarily including:

1）Individuals who acquire foreign nationality or long-term/permanent residency overseas but whose primary economic interests originate from within China may be determined as resident individuals with domicile in China.
2）Where a resident individual transfers assets into an offshore trust through a nominee arrangement, such transfer shall be deemed as having been made by the resident individual itself, and the full set of tax rules applicable to resident offshore trusts shall apply.
3）If both resident and non-resident individuals transfer assets into the same offshore trust, it is deemed that all assets are transferred by resident individuals.
4）Economic benefits provided by a non-resident offshore trust to a related resident individual (e.g., providing loans not settled within the year, paying expenses on behalf, etc.) are deemed a distribution of income to that resident individual.

4. Transitional Arrangements

Announcement No. 21 provides a 90-day compliance window (from July 24, 2026, to October 22, 2026) without late payment penalties for existing offshore trusts. Late payment penalties will not be imposed if taxes are declared and paid proactively within these 90 days.

1）Catch-up Payment for Establishment: Unpaid taxes for assets transferred into offshore trusts by resident individuals between January 1, 2023, and December 31, 2025, and by non-resident individuals between January 1, 2023, and the effective date of this announcement. If the amount of individual income tax due but unpaid is relatively large, the tax authorities may extend the period for recovery of taxes in accordance with the law;
2）Catch-up Payment for Existing Income: For income generated before January 1, 2026, by offshore trusts of resident individuals, it should be declared uniformly as "interest, dividends, and bonus income", regardless of the income type.

3）Consequences of Late Payment: Late payment penalties will be imposed for overdue payments; cases involving tax evasion will also be subject to fines.