China’s 90-day grace period for unpaid offshore trust taxes is causing widespread market anxiety. Prof. Berry Hsu and Prof. Yang Liu at HKU Business School have recently shared their insights with Citywire Asia on the tightened grip on cross-border wealth.

Prof. Hsu highlights that the underlying legal principle of taxing residents on worldwide income is not new, but established under the Individual Income Tax Law. With global data-sharing frameworks such as the Common Reporting Standard already in place for tax authorities to cross-reference data, the administrative grace period aims to encourage voluntary compliance, rather than introducing a substantive change to the law.

Prof. Liu adds that trusts should not be treated primarily as ‘tax-avoidance vehicles’. The focus should be on succession planning, robust governance, and long-term asset protection.

To navigate the new landscape of cross-border wealth, the industry will require a higher calibre of expertise from emerging wealth management talent.