The Bank of Singapore has seen a 35percent surge in Chinese clients interested in offshore trusts since the second half of 2018, according to Woon Shiu Lee, the head of wealth planning at the bank. The rate of inquiries leading to the establishment of a trust, which offers “tax-planning opportunities” by giving ownership to third-party trustees, has doubled since August, he said.
The reforms, which take effect on January 1, are meant to reduce the tax burden on lower- and middle-income people by making the rich pay more.
As China’s rich have become richer - the nation’s personal wealth swelled to an estimated $21 trillion (R297trln) last year - the practice of holding wealth abroad or changing their tax residence status has become commonplace. Even as the government strengthened controls on taking money out of the country last year to reduce risky outbound mergers and acquisitions and prevent capital flight, overseas holdings will reach $1 trillion this year, Boston Consulting Group estimates.
Some of China’s wealthiest are already using trusts. Wu Yajun, a developer with an estimated net worth of about $7.5 billion, held almost half of her real estate empire, Cayman Islands-registered Longfor Group Holdings, through a family trust.