Wealthy Chinese Move Money from Offshores to US Banks
Lawyers assist clients in winding down trusts, selling shares, and taking out loans as Beijing expands tax oversight
Chinese authorities have announced that income and capital gains in overseas trusts of Chinese tax residents will be taxed at a rate of 20%. Keith Tan, CEO of Singapore-based Golden Acacia Capital, reported an increase in requests to open accounts in the US: some clients managed to complete the process in less than two months after preparations began in July.
According to Tan, large fortunes are typically directed to private banks, while owners of smaller accounts opt for regional banks or online brokers. The US does not participate in the CRS standard, through which over 100 jurisdictions automatically exchange financial account data; American banks are not required to provide Beijing with similar information.
However, transferring funds to the US does not eliminate tax obligations in China. Clifford Ng, a partner at Hong Kong’s Zhong Lun, noted that transactions involving the withdrawal of funds from banks in Singapore or Hong Kong may be noticeable to tax authorities. Chris Cao, a partner at Beijing’s W&H Law Firm, also believes that information about the transfer could already serve as grounds for tax assessment.
Obtaining new large sums from mainland China is becoming more difficult. Jingkuan Lin, a private banker at Bank of Singapore, expects further restrictions on offshore banking services to servicing capital already located outside the country.
