Chinese billionaires might face taxes on offshore holdings worth $140B
What's the story
China's wealthiest billionaires could be facing a potential crackdown on holdings of nearly $140 billion. The country's government has announced plans to expand its tax net, targeting offshore trusts held by wealthy individuals. The move is part of a broader strategy to boost revenue amid economic challenges and declining property prices. The Chinese government has not publicly named any individuals who may be affected by this new tax policy.
Tax impact
New tax implications for billionaires
The Chinese government has announced a 20% tax on gains from overseas trusts for resident taxpayers.
The deadline to report and pay these taxes without penalty is October 22.
Among those potentially most affected are eight of the world's top 500 richest people, according to the Bloomberg Billionaires Index.
These tycoons own stakes in companies with significant operations in China through offshore trusts, stock exchange filings show.
Wealth distribution
Trusts located in tax havens
The eight billionaires, who founded some of China's most well-known companies, have their trusts in tax havens like the British Virgin Islands and Cayman Islands.
Their combined holdings were worth about $140.2 billion as of Friday, according to Bloomberg calculations based on regulatory filings.
Some business owners have already sold hundreds of millions of dollars worth of shares to pay for taxes imposed by the new policy.
Policy details
'Common prosperity' campaign
The tax collection drive is part of Chinese President Xi Jinping's "common prosperity" campaign.
This also included a crackdown on local tech giants and pay cuts for bankers.
Despite some curbs easing in recent years, a prolonged property slump has hit local government finances hard, prompting them to look for alternative revenue sources.
Advisory role
Wealth advisers and lawyers step in
Wealth advisers and lawyers are now helping families trace the history of their offshore structures.
This includes looking back to when the assets were first transferred into the trusts and calculating how much money they've made since then.
Some families are looking to simplify their overseas finances, while others are considering restructuring or unwinding certain arrangements.