Chinese tycoons shift $17bn to family trusts amid tax raid
Four Chinese tycoons transferred more than $17bn of their wealth into family trusts late last year, an indication that many of China's wealthy are looking for ways to preserve their fortunes amid tightening tax policies.
Sunac China Holdings chairman Sun Hongbin, Longfor Group Holdings chairwoman Wu Yajun, Zhou Hei Ya International Holdings owner Tang Jianfang, and Dali Foods Group chair Xu Shihui are said to have shifted a huge part of their shareholdings to their respective trust entities by the end of 2018, Bloomberg reports. The ownership structures of all four tycoons involve entities in the British Virgin Islands.
Succession planning was cited as the key reason for the transfers, though representatives from each have yet to provide an official comment on the matter.
The Chinese government is currently revising its tax system as a response to a slowing economy and is reviewing how it taxes the rich, among other changes.
Analysts say that while moving wealth offshore may be a viable strategy, it is not a guarantee of immunity from taxation. However, it could get them a wider deferral space. The new tax guidelines are not explicit in terms of how offshore trusts will be dealt with, so its interpretation is totally up to the state.
Analysts told the Business Times that while moving wealth offshore may be a viable strategy, it is not a guarantee of immunity from taxation. However, it could get them a wider deferral space. The new tax guidelines are not explicit in terms of how offshore trusts will be dealt with, so its interpretation is totally up to the state.
