On July 24, 2026, China's MOF and State Taxation Administration issued Announcement No. 21 of 2026 (plus STA Announcement No. 15), creating the first individual income tax framework for offshore trusts. A 20% IIT applies to gains when Chinese tax residents transfer property into offshore trusts and to certain distributions; trustees and residents must report annual trust income even if undistributed, and residents must file historical liabilities covering Jan 1, 2023-Dec 31, 2025 within 90 days. A 25%-or-more equity/voting control threshold (or substantive control below it) triggers taxation.
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China imposes 20% income tax on offshore trusts, 90-day filing for 2023-25 back liabilities
Why this matters for founders
Founders holding equity or wealth through offshore trusts or holding structures should map their positions now, self-report any 2023-2025 back liabilities within the 90-day window, and set up annual trust-income reporting to avoid penalties.
Source: Morgan Lewis
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