China (PRC) has announced new reporting requirements for its residents. Such measures also affect individuals residing in the country for more than a year and operations registered there.
The new PRC Foreign Asset Reporting Requirements came into effect on 1 January 2014 and are widely regarded as being intended to prevent or discourage assets being transferred offshore.
This comes against the background of more revelations made from the documents leaked to the Washington-based International Consortium of Investigative Journalists (and first reported in April last year) that nearly 22,000 people with addresses in mainland PRC and Hong Kong are invested in offshore arrangements and establishing companies in jurisdictions such as the British Virgin Islands and the Cook Islands. Among them are some of PRC’s most powerful men and women from the country’s political and business elites.
Key changes include a broader definition of what must be reported and who is liable to report and concerns have been expressed in addition over the data being requested by the authorities in PRC which it is intended for use “for the purposes of statistical analysis of international receipts and payments for the benefit of the State”. It is feared such data will be shared with other departments (such as the tax authorities) at a later stage.
Failure to comply with the new reporting requirements will result in fines of up to RMB 300,000 (about £30,000) for institutions and companies and RMB 50,000 (about £5,000) for individual cases. These measures could be a signal of PRC’s intention to increase taxes on foreign assets in the future. It could also encourage wealthy Chinese to consider leaving the PRC.
For further information, contact Robert Drysdale, Associate, Wealth Planning +44(0)20 7689 7168 or email firstname.lastname@example.org
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