MOF and the State Administration of Taxation Clarify Individual Income Tax Matters Concerning Offshore Trusts

On July 24, 2026, the Ministry Of Finance (MOF) and the State Administration of Taxation issued the Announcement on Matters Concerning Individual Income Tax Related to Offshore Trusts (the “Announcement”), which took effect upon issuance.

The Announcement clarifies that where an individual contributes property into an offshore trust established under foreign law and obtains proceeds through such trust, such proceeds constitute income subject to Individual Income Tax. Where a resident individual contributes property into the trust, the individual shall declare under the category of “income from transfer of property” based on the market price after deducting the original value and reasonable expenses; as for income accrued during the existence of the trust, regardless of whether it is distributed, such resident individual shall make annual declarations under the category of “income from transfer of property” or “interest, dividends and bonuses income”. The Announcement also provides for matters such as trust termination, a resident becoming a non-resident, succession upon death, contributions by non-residents and mixed contributions, foreign tax credit, deemed distribution, determination of control and overseas entities, declaration deadlines, circumstances for supplementary tax payment, and transitional arrangements.