Authorities tighten offshore tax compliance

China's tax authorities have disclosed six recent cases involving individuals who failed to declare overseas income, as part of a wider effort to strengthen compliance among residents with cross-border earnings.

Tax bureaus from cities like Beijing and provinces including Fujian, Guangdong and Sichuan recently made public a series of guidance and rectification cases, urging residents to fulfill their legal tax obligations.

Zhang Wei, dean of the School of Taxation at Jilin University of Finance and Economics, said: "Reporting overseas income is not a new tax obligation. It has been a fundamental principle of China's tax system since the law was first implemented in 1980."

Under China's individual income tax law, residents, defined as those who have a domicile in China or stay in the country for 183 days or more within a tax year, are required to declare and pay taxes on income earned both domestically and abroad. This includes income from foreign employment, interest, dividends or gains from selling overseas assets such as shares.

Zhang noted that China has expanded the scope and depth of its international tax cooperation in recent years, particularly through participation in the Common Reporting Standard, an automatic exchange of financial account information between countries. This has significantly enhanced the authorities' ability to monitor offshore income.

According to the State Taxation Administration, the CRS system now enables Chinese tax authorities to access offshore financial data from more than 100 countries and regions, with coverage expected to grow to over 150 jurisdictions by the end of 2025.

"Through CRS and domestic tax systems, authorities can now match offshore financial information with self-reported tax filings. That makes it easier to identify underreported income," he said.

Li Na, associate professor at East China University of Political Science and Law, said: "Declaring overseas income is not just a Chinese requirement. It is standard practice in most countries and regions."