China eases uncertainty over offshore trust taxes before grace period ends
New guidance exempts some offshore stock incentive trusts after an executive ‘successfully’ appeals tax treatment
The approach appears to be translating into greater clarity from regulators. Earlier this week, the State Taxation Administration published a question-and-answer series that suggested Beijing was implementing the rules in line with international practice.
“We successfully defended ourselves,” said a person familiar with the matter at a Hong Kong-listed mainland Chinese company, who asked not to be identified because the issue was sensitive.
About a month before the latest clarification was issued, the company was asked to pay tax related to an offshore trust for a non-Chinese executive. It appealed on the grounds that the vehicle was a stock incentive trust set up in 2021 before the company’s initial public offering (IPO), said the source.
