Offshore trusts, once rarely discussed by the public or deliberately obscured through complex multi-layered structures, have become a hot topic of social debate in recent times.
On July 24, the Ministry of Finance and the State Administration of Taxation jointly issued the "Announcement on Matters Concerning Individual Income Tax on Offshore Trusts" (referred to as "Document No. 21"), requiring that the beneficiaries behind offshore trusts—primarily wealthy individuals—pay individual income tax.
Under the requirements of Document No. 21, taxes must be paid at a 20% rate during the three key stages of an offshore trust: its establishment, duration, and liquidation. More importantly, even if an individual has obtained long-term or permanent residency abroad, or has already immigrated and acquired foreign citizenship, as long as their business operations remain within China, they are still subject to the new tax rules.
In reality, this is driven by the continued implementation of the "CRS 2.0" version launched in 2023, along with the increasingly mature penetrating supervision of the Golden Tax Phase IV system.
Currently, one of the most discussed topics in the market is the case of Pan Shiyi and his wife Zhang Xin, the founders of SOHO China, and how much individual income tax they might need to pay.
In 2002, SOHO China began to build its red-chip structure. Pan Shiyi and Zhang Xin each controlled 47.39% of the shares through BVI companies. In 2005, the shares were placed into the HSBC trust established by Zhang Xin. SOHO China was listed on the Hong Kong Stock Exchange in October 2007. In 2021, US-based Blackstone attempted to privatize SOHO China for approximately HK$236.57 billion, but the deal ultimately fell through. In September 2025, Pan Shiyi and Zhang Xin resigned from their positions as Chairman of the Board and CEO of SOHO China.
According to the new regulations, based on SOHO China's historical dividends, the proceeds from cashing out mainland property assets, and the appreciation in equity value, the market has estimated the cumulative taxable net income from Pan Shiyi and Zhang Xin's offshore trust to fall within a range: under a conservative estimate, taxable income is about HK$10 billion, corresponding to an estimated tax liability of approximately HK$2 billion; under a neutral estimate, taxable income is about HK$20 billion, with a corresponding tax of roughly HK$4 billion; and under an upper-bound estimate, taxable income is nearly HK$35 billion, with the highest potential tax reaching HK$7 billion.
Recently, a rough calculation based on publicly available data surfaced, estimating the total tax bills for some of the wealthiest individuals. Although it is unofficial data, a quick glance at the figures is still shocking.
Under the new rules of Document No. 21, for offshore trusts established more than three years ago, no back taxes will be levied on the assets initially placed into the trust. However, income generated during the trust's duration must be reported and taxes paid, with a three-month grace period for filing.
The tax liabilities can be divided into three categories: The first category involves taxes due within 90 days, primarily covering dividend-related tax payments. This includes capital gains taxes on dividends received and the proceeds from reducing shareholdings in 2025 and prior years. The second category is deferred tax. The book value of company shares placed into an offshore trust, before the company's listing, is extremely low. However, after the listing, the fair market value of these shares often multiplies several times, dozens of times, or even hundreds of times, meaning the tax base is nearly equivalent to the current market value. While this tax is not due immediately, it must be paid when the shares are sold. The third category is the "asset-inclusion tax" on assets placed into offshore trusts within the last three years.
Based on the informal market calculations using public data, Pinduoduo's actual controller Colin Huang (Huang Zheng) and Xiaomi's actual controller Lei Jun may each face potential tax liabilities of around 50 billion RMB, primarily in deferred taxes. Alibaba's Jack Ma (Ma Yun) may face a tax bill of about 17.5 billion RMB, including approximately 17 billion RMB in potential deferred taxes and around 0.4 billion RMB in back taxes on dividends. JD.com's Richard Liu (Liu Qiangdong) may be liable for about 10 billion RMB in taxes, including roughly 9 billion RMB in deferred taxes and about 0.9 billion RMB in back taxes on dividends. Haidilao's Zhang Yong and his wife Shu Ping may face a tax bill of 10 billion RMB, including about 8.5 billion RMB in deferred taxes and 1.4 billion RMB in back taxes on dividends. Longfor Group's Wu Yajun may be liable for about 8.5 billion RMB in taxes, including approximately 5.5 billion RMB in deferred taxes and about 3 billion RMB in back taxes on dividends. Meituan's Wang Xing may face a tax bill of around 8 billion RMB, primarily in deferred taxes. Chagee's Zhang Junjie may be subject to an asset-inclusion tax of roughly 1.4 billion to 2.8 billion RMB. Sunac's Sun Hongbin may be liable for about 1.3 billion RMB in taxes, including approximately 0.7 billion RMB in deferred taxes and 0.6 billion RMB in back taxes on dividends.
Regarding Document No. 21, the People's Daily has published an article emphasizing the need to "protect the lawful and crack down on the illegal," drawing a clear line between compliance and tax avoidance. The policy only regulates tax filing and tax payment obligations, while reasonable cross-border risk isolation and intergenerational wealth arrangements remain protected by law.