Chinese local law enforcement agencies have recently been crossing administrative boundaries under the pretext of investigating tax evasion, targeting private enterprises’ assets—a practice dubbed "ocean-going fishing."
Now, an overseas upgraded version of "ocean-going fishing" has arrived. The Chinese Communist Party (CCP) is further expanding its law enforcement network to regions including Hong Kong, Singapore, the Cayman Islands, and North America.
Under China's new comprehensive targeting of overseas trusts, taxes are now levied across three distinct stages.
At entry, transferring domestic assets into a trust is subject to tax on asset transfer income—a shift from the previous policy, which treated these movements as tax-free gifts or transfers.
During the trust's lifecycle, all generated earnings must be declared annually and taxed at 20 percent, even if left undistributed (unlike before, when tax was deferred until funds were remitted to personal accounts).
Finally, upon dissolution, any remaining liquidation proceeds distributed to beneficiaries are taxed as income from interest, dividends, and bonuses.
Tang Jingyuan, a commentator on China affairs, told NTD that this policy specifically targets rich, high-net-worth Chinese individuals for wealth extraction.
"Private entrepreneurs in China who have set up trusts in places like the Cayman Islands are, in my view, the primary targets. This is a further squeezing of private entrepreneurs by the CCP," Tang said.
He added that the wealthy class seeking tax avoidance is also in the crosshairs.
Under the new policy, even if wealthy individuals hold foreign passports or green cards, they will still be classified as "Chinese tax residents" and subject to the new policy if their economic activities and core assets remain grounded within the country.
"The CCP has already rolled out a series of related policies, all aimed directly at the wealthy," he said. "This is part of a systematic, comprehensive toolkit deployed by the regime to harvest the assets of its citizens."
These policies are being rolled out at a time when China is grappling with a burst real estate bubble, a national fiscal crisis, skyrocketing unemployment, and bankrupt local governments.
"To cope with this situation," Tang said, "the CCP tried every possible means to boost the economy. Having failed to see results, it can now only kill the goose that lays the golden egg and go after the wealthy."