Ministry of Finance and State Taxation Administration issue Announcement on Relevant Matters of Individual Income Tax on Offshore Trusts.

The Ministry of Finance and the State Administration of Taxation issued the "Announcement on Issues Related to Individual Income Tax on Offshore Trusts". It is pointed out that individuals who transfer property to offshore trusts and earn income through offshore trusts are considered income as defined in the second article of the "Individual Income Tax Law of the People's Republic of China" and should declare and pay individual income tax according to the provisions of this announcement. For resident individuals, if they become non-resident individuals during the existence of an offshore trust, the taxable income shall be the market value of the offshore trust assets on the day the individual becomes a non-resident individual minus the original value. The resident individual shall declare and pay individual income tax according to the categories of "interest, dividends, and bonuses income". For the period from January 1 of the year when the individual becomes a non-resident individual to the date of becoming a non-resident individual and the previous years in which personal income tax was not paid when it should have been, the resident individual shall declare and pay according to the provisions of this announcement.