PRC Announcement No. 21: Key Considerations for China's New Offshore Trust Rules

Quick Read:

• Increased Reporting Requirements: PRC Announcement No. 21 introduces tax and reporting considerations for offshore trusts and comparable structures involving PRC tax residents. 

• Focus on Governance: Families and investors should review and document the governance arrangements for structures involving PRC tax residents, including decision-making processes, valuations and record-keeping. 

• Opportunity to Revisit Arrangements: The changes give families and investors a chance to reevaluate whether their current vehicles are meeting their long-term objectives, such as estate planning and wealth preservation.  

What is PRC Announcement No. 21?

Announcement No. 21, issued by the Ministry of Finance and the State Taxation Administration of the People’s Republic of China, introduces individual income tax rules relevant to offshore trusts and comparable asset-holding arrangements involving PRC tax residents. It increases the need to assess how contributions, income and gains and distributions may be treated for PRC tax purposes. 

Effective from 24 July 2026, the measures form part of China’s evolving approach to the taxation and transparency of cross-border wealth structures. They may affect PRC tax residents, including individuals and families with international investments or other assets held outside mainland China. 

What Are the Key Changes Investors Should Be Aware Of?

The application of Announcement No. 21 will depend on the facts of each structure, including the tax residence and roles of the settlor, trustee, beneficiaries and other parties. Investors should obtain advice based on their specific circumstances before taking action. 

These changes will create new tax and reporting considerations at every stage of an offshore trust. They apply when assets are transferred into the trust, when the trust generates income or gains, and when beneficiaries receive distributions. 

Here are some of the key considerations: 

What Does This Mean for Investors?

For PRC tax residents with offshore trusts or other international wealth structures, the announcement highlights the importance of understanding how assets, transactions, governance decisions, and distributions are documented and managed. They may wish to review existing arrangements against applicable governance, tax and reporting requirements. 

Although the measures primarily concern PRC tax residents, other parties connected to affected structures may also need to understand their potential implications. The development reflects China’s increasing focus on transparency and oversight in cross-border wealth arrangements. 

The changes may also create an opportunity for families and investors to assess whether their arrangements support their long-term objectives, such as estate planning and wealth preservation.   

How Can Investors Prepare?

Investors can begin by reviewing offshore trusts and other wealth structures involving PRC tax residents. The review should cover the parties’ roles and tax residence, asset transfers, income and gains, distributions, governance arrangements, records and valuations, with documentation updated where necessary. 

Investors should determine whether new tax filing, reporting or documentation obligations apply to the relevant parties and transactions within each structure. 

Before making significant changes to an existing arrangement, investors should seek appropriate tax, legal and operational advice. This can help them understand the potential consequences and make informed decisions based on the structure’s specific circumstances. 

Contact Bolder

As regulations continue to change, investors and families may consider reviewing their existing structures to ensure they align with their objectives and are compliant with changing requirements.  

Bolder Group supports Chinese and international families, investors and their advisers with governance and corporate administration solutions for cross-border structures. Our teams can help review governance arrangements, documentation and administrative processes in light of evolving regulatory requirements. 

Discuss your structure with our team: Get a Cost Estimate