New PRC Individual Income Tax Rules for Offshore Trusts

Issued on 24 July 2026, China’s Official Announcement No. 21 establishes comprehensive individual income tax rules governing offshore trusts, effective immediately. It standardises tax compliance for resident and non-resident individuals throughout the full lifecycle of offshore trusts, including asset injection, annual accrued income, trust termination, residency change and inheritance scenarios.

Tax liabilities arise regardless of actual profit distributions. Administrative fees and professional charges are non-deductible, while eligible overseas tax payments can be credited. The policy clarifies anti-avoidance rules for controlled foreign entities, deemed income distribution and related-party transactions.

A 90-day penalty-free window is granted for unsettled offshore trust tax liabilities accrued from 2023 to 2025. All offshore trust-related transactions occurring on or after 1 January 2026 must fully comply with the new rules, with late payment penalties and tax evasion sanctions strictly enforced.