China is contemplating taxing rich Chinese who emigrate to avoid tax and transfer their assets and wealth overseas.
Defending national taxation sovereignty and curb asset flight, Chen Jingying, a deputy to the National People's Congress and a counsellor to the Shanghai government told Yicai Global that loopholes in China's tax system for wealthy Chinese expats need to be addressed.
Chen said that compared with developed countries, there are loopholes for such people in China's tax system.
According to Chen, an expat tax would apply to those who renounce Chinese nationality reported Yicai Global.
If someone gives up Chinese citizenship, all their property could be considered sold at fair value, including real estate, stocks, bonds, and personal items such as cars, and any gains or losses could be subject to income tax, Chen said.
Chen proposed that for Chinese citizens who emigrate for tax reasons, the tax authorities could determine that they are still residents for tax purposes for the next 10 years if they maintain substantial economic ties with China for five of the 10 years before they leave.
Chen also advised that the government should improve tax information collection for individuals who have renounced Chinese citizenship and their affiliated businesses via the Common Reporting Standard system. In addition to obtaining information on their taxable capital and property in China, regulators should also collect information about their overseas assets to combat tax evasion through immigration and offshore trusts, Chen said.
( With inputs from ANI )
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