China has launched a global hunt for hundreds of billions of dollars in unpaid taxes, targeting the ultra-rich to fill a deepening fiscal hole. Authorities are increasing scrutiny of overseas capital gains and investments, with reviews in some instances going back as far as 2000. Chinese banks have been instructed to review overseas investments to check if income has been declared to tax authorities.

This campaign focuses on gains from real estate, equities, precious metals, and cryptocurrencies. In some cases, banks are coordinating with authorities to freeze accounts until taxes on offshore assets are paid. The motivation is clearly fiscal; China’s budget revenue has mostly plateaued, and revenue from land sales collapsed from a 2021 peak of Rmb8.7tn to Rmb4.15tn after a property market slump.

New rules also target offshore trusts, closing loopholes used to shelter assets. Under these rules, income from offshore trusts may face a 20 per cent tax at multiple stages. This shift brings China’s taxation system closer to the US model, where taxpayers are taxed on worldwide income.