Two Departments: Individuals should declare and pay individual income tax when transferring assets to offshore trusts and obtaining income through offshore trusts

Odaily Odaily News: Two departments have issued an announcement regarding matters concerning individual income tax on offshore trusts. When an individual transfers assets into an offshore trust or obtains income through an offshore trust, such actions constitute income as stipulated in Article 2 of the Individual Income Tax Law of the People's Republic of China, and the individual shall declare and pay individual income tax in accordance with the provisions of this announcement. The term "offshore trust" as used in this announcement refers to a trust established under foreign law or other legal arrangements with trust functions. Other legal arrangements with trust functions refer to foreign legal arrangements that are not established in the name of a trust but substantially possess similar trust functions, excluding financial products issued by banks, insurance companies, securities companies, fund companies, etc., that are regulated by the financial regulatory authorities of the country or region where they are located, conduct business independently for unspecified clients, and bear risks. (Jin Shi)