Two sectors: Individuals who load property into an offshore trust and derive income through an offshore trust shall declare a tax due

On 24 July, the Ministry of Finance and the Directorate-General of Taxes issued a bulletin clarifying matters relating to personal income tax for offshore trusts. In accordance with the circular, the income tax of the individual is declared in accordance with the requirements for the deposit of property into an offshore trust and the income derived during the life of the offshore trust. The circular issued on this occasion makes clear, respectively, matters relating to personal income tax relating to the establishment, viability and termination of the offshore trust. For example, in the establishment of the chain, the individual resident loads the property into an offshore trust, the balance of which is taxable at the market value of the property, less the original value of the property and reasonable expenses, and is subject to a tax rate of 20 per cent on the basis of the “proceeds of transfer of property”. In addition, at the time of deposit, a tax rate of 20 per cent is applied to the income tax of individuals on an annual basis, depending on the nature of the proceeds, which are derived from “transfer of property” and “interest, dividends, dividends” during the life of the offshore trust in which the individual is loaded. At the same time, the bulletin clarifies the matters relating to the processing of tax returns by taxpayers and provides for the payment of tax returns on the offshore trust that was established prior to its issuance. According to the bulletin, an offshore trust has been established for more than three years, and no further taxes are levied on the establishment chain; the proceeds of the deposit chain, regardless of the time of establishment, are to be declared, but a three-month grace period is to be granted for the filing of an exemption from late payment. It is understood that, under our personal income tax law, income earned by individual residents from within and outside the country, as well as income earned by non-resident individuals from within the country, is subject to personal income tax, which is also common practice in major countries and is an international practice. The experts stated that the clarification of the offshore trust personal income tax-related matters between the two sectors and their adaptation to the currently mature conditions of administration would contribute to greater tax certainty and transparency, stabilize taxpayers ' expectations and promote social equity and preserve the interests of the State. Xinhua