Advisers Report More U.S. Bank Inquiries From Wealthy Chinese Clients

Private bankers and lawyers who advise wealthy Chinese clients say inquiries about U.S. bank accounts have increased as China spells out how tax rules apply to offshore trusts. The advisers also described some clients moving assets from Singapore or Hong Kong to U.S. accounts, but gave no combined figure for accounts or transfers.

Keith Tan, CEO of Singapore-based Golden Acacia Capital, said planning started in July; he described account setup for some clients as a process lasting under two months. “It has become relatively prevalent,” Tan said. Advisers gave no overall count of clients or account openings, total transfer value or names of banks.

China’s Ministry of Finance and State Taxation Administration issued rules July 24 applying a 20% individual income tax to a resident’s taxable gain when assets are placed in an offshore trust. The taxable gain is the asset’s market value minus its original value and reasonable expenses, so the tax is not based on the full amount transferred. Income generated by a trust funded by a Chinese tax resident is also taxed annually at 20% according to its category, even when it remains in the trust.

The rules cover unpaid taxes on assets placed in offshore trusts from Jan. 1, 2023, through Dec. 31, 2025, and certain trust income arising before 2026. Taxpayers had 90 days from the July 24 announcement to declare and pay those liabilities without late-payment charges. China’s filing deadline for offshore-trust liabilities was part of that window.

The United States is outside the Common Reporting Standard (CRS), an automatic financial-account data exchange system that includes China, Hong Kong and Singapore. The U.S. conducts automatic exchanges under the Foreign Account Tax Compliance Act (FATCA). CRS status does not remove a Chinese tax resident’s duty to report taxable income or establish the full scope of information sharing through other arrangements. China’s guidance says a person may still be considered a tax resident if their main economic interests are in China, even with foreign citizenship or long-term foreign residency.

Clifford Ng, a partner at Hong Kong law firm Zhong Lun, cautioned that a move from Singapore or Hong Kong could leave a paper trail. “Hiding is not tax planning,” Ng said. The 90-day window to declare covered liabilities without late-payment charges closed Oct. 22.