Mainland tax chase may shift offshore trusts out of Hong Kong

2nd November 2026 – (Hong Kong) Beijing’s push to collect unpaid personal tax on offshore trusts is stirring talk of a wealth “house move”, with market voices warning that some mainland fortunes parked through Hong Kong structures could be steered towards the United States — and that the city’s trust book may feel the chill.

Mainland regulators have lately tightened scrutiny of residents’ cross-border investing and overseas income. Reports include the China Securities Regulatory Commission cracking down on illegal offshore share trading, while the State Taxation Administration has been linked to a 20 per cent levy on gains from mainland residents’ overseas insurance policies.

Under the State Taxation Administration announcement on personal income tax administration for offshore trusts, back-tax recovery is in principle capped at three years — covering amounts from January 2023 onwards. Tax is assessed on property-transfer income and on returns generated while a trust remains in force, at a rate of 20 per cent. Related July guidance required mainland residents to declare offshore-trust asset changes by 22nd October, after which late payment and compliance risk rise.

Josephine Chung, director of CompliancePlus Consulting, said Hong Kong and the mainland both implement the OECD Common Reporting Standard, so many mainland tycoons who set up offshore trusts in the city in recent years worry that account data shared under CRS will feed the tax net. “The market has long expected some well-known mainland figures to sell shares to raise cash for tax,” she said.

Those who listed companies and moved assets offshore earlier are less exposed, she added. Because the new drive is executed locally, industry chatter suggests provinces and cities are applying different degrees of tightness, with some local governments open to negotiating payment plans that include partial relief.

That patchiness, Chung argued, underlines uncertainty in mainland tax practice and may push some clients to run assets “thoroughly offshore” — towards jurisdictions that have not joined CRS. The United States, which does not participate in the CRS information-exchange network in the same way, is being floated as a fresh trust and banking destination for cash already outside the mainland.

Hong Kong’s offshore-trust franchise could therefore face headwinds if clients unwind or relocate structures. Chung noted a counterweight: the city is advancing a carried-interest tax concession for fund managers, which could draw more funds and partly cushion the blow to the wider wealth-management cluster even if pure trust flows soften.