China will impose individual income tax from Friday on assets placed in offshore trusts and the income they generate, the finance ministry and tax authority said, closing a loophole long used by wealthy citizens to shield fortunes ‌abroad.

Such ⁠offshore trusts ⁠have long been a gray zone in Chinese tax ​enforcement, and the move is Beijing's latest effort to capture revenue ​from wealth its citizens hold overseas.

The new rules levy a tax of 20% on the ​appreciation in value at the time ⁠of transfer ‌of shares, property or other assets ​into offshore ​trusts, the finance ministry and state ⁠tax administration said in a joint statement.

Income from ​such trusts and offshore entities they ​control will be taxed annually at 20%, the authorities said, but gave no estimated of the funds held overseas.

The rules feature sweeping anti-avoidance provisions. Those who become foreign citizens or overseas permanent ‌residents but retain their main economic interests in China may still be treated as Chinese ​tax residents, ​they added.

Unpaid ⁠taxes on assets placed in trusts since January 2023, and on trust income received before 2026, must be ​settled within 90 days to avoid penalties for late payment.

Larger unpaid amounts could face an extended recovery period, the authorities said, while evasion could lead to back taxes, surcharges and fines.