When a friend received a text message from the mainland Chinese tax authorities asking her to ensure that all her declared income – including income from abroad – was accurate, Fan, a finance professional who asked that her full name not be used, was shocked.
Her friend was now coordinating with the authorities to settle the outstanding taxes on her overseas trading, she said, adding that “there is no alternative but to comply” with such texts and that the incident had left her on guard about the implications for her own offshore portfolio.
“When the government’s after you, they’ll trace things all the way to beyond the borders,” Fan said.
As Beijing tightens tax enforcement on its citizens’ offshore assets, it is moving beyond high-profile cases involving the ultra-wealthy to target a broader demographic of retail investors and middle-class professionals.
The hunt has focused on offshore assets and stock market gains. Since last year, authorities have called on mainland citizens to self-declare such income dating back to 2022. Offshore earnings from stocks are subject to a 20 per cent tax on capital gains and dividends, alongside potential late fees.
Recent data indicates the enforcement measures might be paying off. Authorities recovered 7.1 billion yuan (US$1 billion) from 4,223 “high-risk” individuals in sectors such as equity transfers and entertainment live-streaming last year, according to the State Taxation Administration.
