China has begun a global search for billions of dollars in unpaid taxes dating back as far as 2000, putting offshore holdings used by wealthy mainland Chinese under fresh pressure. The government launched the effort on July 24.
It has demanded a 20 per cent tax on offshore gains from purchases of real estate, equities, precious metals and cryptocurrencies. Income from offshore trusts will also face a 20 per cent tax at multiple stages under the new rules.
The rules reach into a large pool of wealth. Boston Consulting estimates that wealthy mainlanders hold up to US$1.2 trillion in offshore low-tax hubs, including Hong Kong and Singapore. KPMG has said more than half of China’s super-rich, defined as people with net worth or investible assets of more than US$30 million, had established offshore trusts.
For wealth managers serving those clients in Hong Kong and Singapore, the immediate issue is the old machinery of offshore wealth. Traditional trust structures and shell companies are under tighter scrutiny. Wealthy clients are being pushed towards more elaborate arrangements, including private wealth management firms, family offices and discretionary investment accounts in jurisdictions such as Dubai or the Cayman Islands.
Money has continued to leave mainland China. Resident capital outflows reached a record US$809 billion in 2025. The Hurun Report estimates that 30-40% of China’s high-net-worth individuals hold assets abroad.
Hong Kong remains a major booking centre for cross-border money. Cross-border wealth booked there last year stood at US$2.95 trillion, up 10.7 per cent on 2024. Yet the authorities have also moved against the channels through which mainland clients reach offshore markets: Futu, Tiger and Longbridge, three online Hong Kong stockbrokers, were punished for soliciting business in China without an onshore licence.
This is part of a broader policy drive. The government has pursued a crackdown on real estate speculation, tighter scrutiny of offshore transfers and a push for domestic consumption.
There were earlier warnings for people whose wealth was already offshore. In 2023, authorities pursued undisclosed offshore wealth in high-profile cases, imposing fines and freezing assets. Assets belonging to real estate tycoons were frozen, serving as warnings to others.
Older high-net-worth individuals who have long relied on offshore wealth have become more cautious. Younger generations are using legal gray areas, including investment migration visas or cryptocurrency.
China has also offered a larger formal route for overseas investment. In early September, it increased by US$6.8 billion to a record US$183 billion the total that can be invested through the QDII scheme.
The fiscal backdrop is tighter. China’s fiscal revenue fell 1.7 per cent in 2025 from a year earlier, its first contraction since 2020. The Standard & Poor Index has risen 34 per cent since September 2025.
For savers comparing returns, the interest rate on a one-year US dollar deposit at Citibank is four per cent, compared with 0.95 per cent for a one-year yuan deposit at the Industrial and Commercial Bank.
The new tax hunt leaves the core question open: whether tighter enforcement will deter offshore asset placement or send it into newer structures and jurisdictions. What is clear is that trusts, shell companies and the intermediaries around them now face closer attention.
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