Beijing authorities have launched a global tax chase against super-rich individuals, tracing unpaid taxes amounting to billions of dollars over the past few decades to fill the worsening fiscal gap. Chinese super-rich have long been using offshore trusts to hide their wealth abroad. The authorities’ move has sparked panic, accelerating the exodus of the wealthy. Experts analyze the repercussions of the Chinese Communist Party’s actions.
According to a report by the British Financial Times on August 5, this wave of tax pursuit targets profits derived from assets such as real estate, stocks, precious metals, and cryptocurrencies. Officials, bankers, and consultants have confirmed that the investigations date back to as early as 2000.
It is reported that officials are utilizing artificial intelligence (AI) technology to analyze investment records with extreme efficiency.
China’s budget income heavily relies on tax revenue. With the real estate market continuing to slump, revenue from land sales, once a core financial resource for the country, has dropped from a peak of 8.7 trillion RMB in 2021 to 4.15 trillion RMB in 2025.
The Ministry of Finance of the Chinese Communist Party announced on July 22 the financial situation for the first half of the year, revealing that all provinces have a financial self-sufficiency rate below 100%, unable to cover their expenses.
To salvage the depleted treasury, the tax authorities of the CCP have shifted their focus to the overseas assets of the wealthy.
The Ministry of Finance and the State Administration of Taxation issued a notice on July 24 regarding “Issues Concerning Individual Income Tax on Offshore Trusts.” Offshore trusts referred to in the notice are trusts established under foreign law or other offshore legal arrangements with trust functions. Chinese residents who transfer assets to offshore trusts or derive income through offshore trusts are required to declare personal income tax.
The new regulation includes income generated when Chinese residents transfer assets to offshore trusts, revenue generated during the trust’s existence, and liquidation gains after the trust terminates in the taxable scope, subject to a 20% tax rate. Individuals who have already set up offshore trusts may also need to declare and pay previously unpaid taxes.
The authorities of the Chinese Communist Party require relevant taxpayers to declare any unpaid taxes within 90 days of the announcement’s implementation date (before October 22). Failure to disclose may result not only in paying a 20% tax but also in facing additional taxes and late fees. It may lead to prosecution if illicit funds are involved.
Professor Sun Guoxiang from the Department of International Affairs and Business at Nanhua University in Taiwan pointed out in an interview with Dajiyuan that this wave in China is not just about checking taxes but about making overseas assets transparent, traceable, and taxable.
China specialist Wang He told Dajiyuan that for the CCP to levy taxes, they first need to understand the distribution of wealth among the rich, conducting comprehensive and detailed collection and monitoring of their various overseas investments. It appears that the CCP has already completed comprehensive surveillance of these wealthy classes.
According to a report by CNBC on August 4, China’s super-rich are “shocked” by the new tax regulations and are scrambling to find cash. As the official countdown progresses, Chinese wealthy individuals are frantically calling lawyers and private bankers. A lawyer based in Singapore mentioned, “This is a watershed moment for private wealth planning related to China.”
Quoting institutional sources, the Financial Times stated that the global tax chase by the CCP has prompted some ultra-high net worth individuals to initiate departure plans from China.
The trend of Chinese wealthy individuals leaving the country has continued for years. A recent report from the Hurun Research Institute shows that the number of high-net-worth families in China dropped to about 2.06 million in 2025, marking the third decline in 16 years, after downturns in 2019 and 2023.
Mainland capital insider Xu Zhen stated that the CCP’s tax pursuit will accelerate the transfer of wealth and physical exodus of the wealthy. As wealth and the wealthy leave, China’s economy will further lose momentum for economic development and innovation.
Recent changes in China’s exit and entry management regulations, scheduled to officially take effect on September 15, were announced by the authorities. The content includes discouraging departures to high-risk countries, export controls, and administrative restrictions on technical security personnel, empowering county-level agencies to make independent decisions on restricting departures and comprehensive supervision of exit and entry intermediaries.
Xu Zhen believes that due to the new regulations, with some powers decentralizing, local governments hold significant authority over exit and entry, forcing the wealthy to pay more taxes and more tributes to satisfy the needs of local governments and specific officials for extra extraction, or for the actual controller to act as a hostage or bargaining chip in exchange for allowing other family members to leave the country. These scenarios are plausible.
Sun Guoxiang remarked that if the wealthy wish to leave but are unable, they will typically resort to tactics like transferring assets, identities, family members, or corporate equity abroad. These involve paying back taxes for security, asset diversification, using family members’ overseas identities to restructure trusts or corporate equity, but the risk of illicit fund outflow increases.
Wang He stated that some prescient individuals foresaw the situation and took their funds overseas, like Pan Shiyi. However, for wealthy figures like Jack Ma, they cannot simply cut ties with the country. While they can move some funds abroad, the majority of their assets remain in China.
Renowned financial commentator “Cold-Eyed Finance” told Dajiyuan that the CCP’s tax pursuit is primarily due to China’s financial collapse, prompting the government to seek ways to gain money, and those wealthy individuals without strong backing could face being reaped. However, the impact on the higher-ups of the CCP may be minimal as their offshore layouts might have been completed long ago.
Wang He suggested that the CCP will handle cases differently. Red second-generation and white gloves of privileged families may have some of their interests ensured. For those without backing or ordinary wealthy individuals, they become meat on the CCP’s chopping board.
Rumors circulating about Pan Shiyi facing substantial fines have not been officially announced by the CCP.
Wang He mentioned that the funds moved abroad by the wealthy will be subject to sharing by the CCP through various means, forcing them to repatriate funds from overseas.
“Unless the individuals have seen through the CCP completely, abandoned their domestic assets entirely, or are able to live abroad independently without having any interaction with the CCP, they may be able to maintain an independent life overseas,” he said.
Wang He likened the current situation to the period of the CCP’s reform of national capitalists in the 1950s.
The “Five Anti-Movement” back then led to many wrongful cases, with numerous capitalists and traders forced to commit suicide, while many individuals were executed or tortured to death, marking the decline of the Chinese mainland capitalist class.
It is noteworthy that on June 19, Xinhua News Agency lauded the socialist transformation from 1953 to 1956, especially the “public-private partnership” within capitalism.
Sun Guoxiang believes that the CCP’s confiscation of wealth from business magnates and the wealthy will ultimately drain private capital and entrepreneurial spirit, making China more like a closed nation with high control, low mobility, and low innovation.
Xu Zhen indicated that with the decline of China’s economy and fiscal depletion, throughout history, authoritarian regimes typically collapse starting from financial crises, leading to social crises, and the CCP is no exception. A 25-year retrospective tax pursuit cannot save its life, merely prolong it.