Guosen Securities Co.,Ltd. has released a research report stating that in an era of comprehensive regulation and global tax transparency, proactively embracing compliance and integrating tax costs into wealth management will become the true moat for high-net-worth clients seeking long-term asset preservation and growth. The firm believes that leading wealth management institutions will benefit the most. Taking life insurance companies as an example, high-net-worth clients are a core source of value-based premiums, and new regulations will strengthen the wealth inheritance attributes of domestic insurance, driving growth in products like whole life insurance and participating policies. This creates a clear advantage for listed top-tier insurers with leading distribution channels and high-net-worth client management capabilities.
Key insights from Guosen Securities include:
On July 24, 2026, China's Ministry of Finance and State Taxation Administration jointly issued the "Announcement on Matters Concerning Individual Income Tax for Offshore Trusts" (referred to as "Announcement No. 21"), which for the first time comprehensively clarified the individual income tax collection and management rules for the entire process of offshore trusts. This announcement systematically covers the tax rules for the asset contribution, ongoing income, trust termination, identity conversion, and inheritance phases of an offshore trust's full lifecycle, and includes a 90-day grace period for back-tax payments. Furthermore, combined with the automatic exchange of global financial information under CRS and the cross-border data networking of the Golden Tax Phase IV system, the tax oversight of offshore assets for Chinese tax residents now achieves dual closure in both regulatory frameworks and data systems.
The tax-avoidance function of offshore trusts is effectively terminated.
The new rules impose taxation at the time of establishment, penetration during the trust's existence, and full settlement upon exit, covering all stages. Combined with anti-avoidance rules that prioritize substance over form, the regulations systematically close the primary pathway for deferring taxes through offshore structures. The tax planning value of offshore trusts has been largely eliminated, with their function now limited to cross-border asset segregation and targeted inheritance scenarios.
The landscape of wealth inheritance tools is undergoing a restructuring.
With the dual rise in tax costs and compliance risks, the demand for offshore trusts among middle and high-net-worth individuals will be structurally diverted. Domestic whole life insurance and insurance trusts, leveraging their advantages of statutory tax exemption, regulatory transparency, and debt isolation, have a strong certainty to absorb the resulting asset repatriation demand.
An era of comprehensive, multi-dimensional cross-border wealth management is arriving.
According to the policy requirements, the costs of establishing and maintaining offshore trusts will rise significantly in the future. Offshore structures built solely for "tax savings" will face immense cash flow pressure, including taxes due upon establishment and annually throughout their existence. "Tax compliance" will transition from a peripheral option in wealth management to the most fundamental threshold. In the past, when tax certainty was lacking, some high-net-worth individuals preferred to move assets offshore. However, with the global implementation of CRS 2.0 and the clear taxation of offshore trusts, the transparency of cross-border assets has reached an unprecedented level. The core keywords of high-end wealth management in the future will no longer be "tax avoidance" or "secrecy," but rather "compliance certainty" and "effectiveness of global asset allocation."
Risk warnings: Premium growth falling short of expectations; downward trend in long-term interest rates; capital market volatility, among others.