Article
China Trust Taxation and Regulatory Reform 2025-2026: PRC Family Trust vs Offshore Trust Under Look-Through Taxation
In one sentence
PRC family trusts retain succession and governance value, but a look-through direction on offshore trust individual income tax narrows the tax-arbitrage case for holding Chinese wealth through offshore structures without substance.
Quick answer
- Regulatory frame: the PRC Trust Law dates to 2001; the NFRA (formerly CBIRC) circulated a draft revision of the Administrative Measures for Trust Companies in 2025 for public comment, and the 2023 trust business three-classification framework separates asset service trusts (which include family trusts and charitable trusts) from asset management trusts (资金信托) and public welfare / charitable trusts.
- Family trust definition still traces to the 2018 CBIRC letter numbered 信托函[2018]37号 ("37号文"): a settlor of a single individual or family, minimum entrusted property of RMB 10 million, beneficiaries must include family members of the settlor, and the settlor cannot be the sole beneficiary — the definition that today separates a bona fide family trust from a 资金信托 wrapper.
- Differentiated tax treatment in practice: PRC family trusts sit on a thin statutory tax base — no dedicated trust tax regime, taxation runs through existing personal, corporate, and transaction taxes; charitable trusts attract charitable-donation deduction treatment where the recognised charity organisation criteria are met; 资金信托 income is taxed through the underlying tax character of the distributed cashflow at the beneficiary level.
- Offshore trust direction: MOF and STA published in mid-2026 an announcement on individual income tax matters relating to offshore trusts (verify circular number to the primary MOF/STA source at time of reading — treat as directional signal; details 以官方最新公布为准). The direction consistent with the announcement is look-through treatment attributing offshore trust income to PRC tax-resident settlors or beneficiaries in defined circumstances, in line with the CFC / individual income tax anti-avoidance framework.
- Comparison for HNW: PRC family trusts remain the natural vehicle for onshore RMB wealth, generational governance of onshore operating businesses, and PRC-domiciled beneficiaries; Singapore, Cayman and BVI trusts remain relevant for USD / multi-currency wealth, non-PRC beneficiaries, and cross-border succession — but the "offshore trust as PRC tax shelter" thesis is materially weaker in 2026 than five years ago.
Why this matters in 2026
Two regulatory currents converge on Chinese HNW wealth planning in 2026, and they push in different directions. On the onshore side, the People's Republic of China (PRC) Trust Law (中华人民共和国信托法, promulgated 2001) is more than two decades old, and revision discussion has moved from academic commentary into concrete regulator work. The National Financial Regulatory Administration (NFRA, 国家金融监督管理总局, the successor to CBIRC) circulated in 2025 a draft revision of the Administrative Measures for Trust Companies (信托公司管理办法) for public consultation — the first major rewrite of that measure since 2007. Alongside the trust business three-classification framework issued in 2023, which separates asset service trusts (which include family trusts and charitable trusts) from asset management trusts (资金信托) and public welfare / charitable trusts (公益慈善信托), the framework in which a PRC family trust operates has been reshaped without a corresponding rewrite of the underlying Trust Law itself.
On the offshore side, the direction on individual income tax treatment of PRC tax residents who use offshore trust structures has crystallised. The Ministry of Finance (财政部) and State Taxation Administration (国家税务总局) published in mid-2026 an announcement on individual income tax matters concerning offshore trusts (readers should verify the exact circular number and effective date against the primary MOF and STA websites at the time of reading — details 以官方最新公布为准). The direction is consistent with look-through attribution: income accumulated inside an offshore trust may be attributed to PRC tax-resident settlors or beneficiaries in defined circumstances, in line with the broader anti-avoidance framework of the Individual Income Tax Law (2019 revision) and the CFC (controlled foreign company) provisions on the enterprise income tax side. The direction of travel is towards tax transparency, not tax arbitrage. For a Chinese HNW principal who structured wealth through an offshore trust in the 2015-2020 window on the assumption that accumulation inside the trust would be tax-deferred at the personal level, 2026 is the year to run the numbers on a substance-and-attribution basis rather than on the older assumption.
Against that regulatory shift, the wealth-planning case for trust structures has not gone away — it has narrowed. Trusts still deliver succession governance, forced-heirship insulation (in the jurisdictions that permit it), creditor separation, and cross-border administration continuity that no simple holding company delivers. What has changed is that the tax dimension of the trust selection question — historically a large part of the offshore trust value proposition for PRC principals — now has to be re-argued from first principles, jurisdiction by jurisdiction, against the PRC look-through direction. This article walks through the differentiated PRC treatment across family trust, charitable trust, and 资金信托 categories, the look-through direction on offshore structures, and the comparison with Singapore, Cayman and BVI trusts, on a neutral basis for Chinese readers considering Singapore as a wealth-planning jurisdiction.
Disclosure: Anlian Group Pte. Ltd. (ACRA filing agent FA20200346, MOM employment agency EA20C0327) is NOT a licensed trust company. ALG does not hold a Trust or Company Service Provider (TCSP) licence and is not licensed under the Singapore Trust Companies Act 2005 to carry on trust business. ALG's role is corporate services and immigration setup on the Singapore side — incorporation, employment pass and PR advisory, ACRA filings, and coordination with independently licensed counterparties. Trust deed drafting, trusteeship, and trust administration engage separately regulated licensed trust companies and qualified legal counsel, whom ALG can introduce but does not employ or supervise. Anlian Capital Pte. Ltd. (UEN 202224273H, MAS Capital Markets Services Licence CMS101702) is ALG's MAS-licensed fund management affiliate and is separately governed; no product is being pitched in this article. Nothing here is legal, tax, or investment advice — Chinese readers should engage qualified PRC tax counsel on the PRC side and qualified Singapore counsel on the Singapore side before making trust structuring decisions in either jurisdiction.
The fundamentals
The PRC framework: Trust Law 2001, the 2023 three-classification framework, and the 2025 NFRA consultation
The PRC Trust Law was promulgated in 2001 and remains the primary statute. Its core structure recognises the trust concept and the tripartite relationship of settlor (委托人), trustee (受托人), and beneficiary (受益人), but leaves open several questions that mature trust jurisdictions have codified — the character of trust property vis-à-vis the trustee's own property, the interaction with the Property Law and General Provisions of the Civil Code, and the taxation of trust settlement, accumulation, and distribution events. Because no dedicated PRC trust tax regime has been enacted, taxation of PRC trust arrangements runs through the existing personal income tax, enterprise income tax, and transaction tax rules applied event-by-event. In practice this means the tax outcome of a PRC family trust is a function of how each cash flow and property transfer is characterised under the ordinary tax rules, rather than a purpose-built trust tax code.
The 2023 trust business three-classification framework, issued by the then-CBIRC and now administered by NFRA, reorganised trust business into three categories: asset service trusts (资产服务信托, which include family trusts, insurance trusts, and estate planning trusts as sub-types), asset management trusts (资产管理信托, historically referred to as 资金信托), and public welfare / charitable trusts (公益慈善信托). The classification is important because the regulatory perimeter — permitted business scope for the trustee company, marketing restrictions, and reporting requirements — differs by category. A trust that is set up as a family trust under the asset service trust category is not a wealth management product and is not subject to the asset management wealth-product regime; a 资金信托 that markets an investment return is inside the asset management perimeter and is subject to the corresponding rules.
The 2025 NFRA consultation on the Administrative Measures for Trust Companies is the first major rewrite of that measure since 2007. The draft is still under consultation at the time of writing and its final form and effective date should be verified against NFRA's published notices before use. The direction of the consultation aligns with the 2023 three-classification framework and tightens supervision of trust company business scope, related-party dealings, and risk isolation between trust property and trust company own property. Neither the Trust Law revision nor the Administrative Measures revision, as of publication date, introduces a dedicated PRC trust tax code.
Differentiated treatment: family trust, charitable trust, and 资金信托 (asset management trust)
The definitional anchor for a PRC family trust is the 2018 CBIRC letter numbered 信托函[2018]37号 ("37号文"), which set out the following criteria: the settlor is a single individual or a single family; the primary purpose is the protection, succession, and management of family wealth; the entrusted property has a minimum value of RMB 10 million (人民币1000万元); the beneficiaries include family members of the settlor; and the settlor cannot be the sole beneficiary. A vehicle that fails any of these criteria — for example a single-beneficiary self-benefiting arrangement, or an arrangement whose primary purpose is investment return rather than family wealth succession — is not a family trust for regulatory purposes and defaults to the 资金信托 / asset management trust category. The 37号文 criteria remain the practical test in 2026, and are the definition NFRA and trust company compliance functions apply.
On the tax side, a PRC family trust that meets the 37号文 criteria still sits on a thin statutory tax base. There is no dedicated trust tax law. Setting up the trust may or may not trigger transfer-based taxes depending on how the entrusted property is characterised (cash contributions differ from equity contributions differ from real property contributions); trust-level income is generally taxed under the tax character of the underlying income; and distributions to beneficiaries are characterised event-by-event under the individual income tax. The tax neutrality that mature trust jurisdictions achieve through a purpose-built regime is achieved in the PRC only by careful structuring against ordinary tax rules, and outcomes vary case by case.
Charitable trusts (公益慈善信托) are governed by the Charity Law (慈善法, 2016; amended 2023) and the joint filing regime with the civil affairs authorities. Where the charitable trust satisfies the recognised charity organisation criteria — a proper filing, a qualifying charitable purpose, and administration by a qualifying trustee — donations to the trust may attract the charitable-donation individual income tax deduction (subject to the standard 30% of taxable income cap for individuals) or the enterprise income tax deduction (subject to the standard 12% of accounting profits cap, with carry-forward for the excess under the 2018 amendment). The recognised-charity conditions must be verified case by case; not every arrangement styled as charitable qualifies for the deduction.
资金信托 (asset management trusts) sit inside the asset management perimeter and are taxed on a look-through-to-underlying-character basis at the beneficiary level: dividends distributed by the trust take the dividend character, interest takes the interest character, and capital gains take the capital gains character. Non-resident investor withholding follows the applicable individual income tax and enterprise income tax rules for the source income. The tax picture for a PRC-resident individual holder of a 资金信托 unit is broadly analogous to the tax picture for a PRC-resident individual holder of a bank wealth management product with the same underlying asset mix.
Offshore trust look-through direction and the PRC-side attribution question
The direction on individual income tax treatment of offshore trusts held by PRC tax residents has moved decisively in 2026. The MOF and STA jointly published in mid-2026 an announcement on individual income tax matters concerning offshore trusts (readers should verify the exact circular number and effective date against the MOF and STA primary sources at the time of reading; details are 以官方最新公布为准 and should not be relied upon from secondary summaries). The direction is consistent with look-through attribution to the PRC tax-resident settlor or beneficiary in defined circumstances, together with reporting obligations. This aligns with the general anti-avoidance direction of the Individual Income Tax Law (2019 revision) — which introduced the residence-based worldwide income tax framework for PRC tax resident individuals — and with the CFC framework already applicable on the enterprise income tax side.
The practical implication is that the historical planning assumption — that income accumulated inside an offshore trust would be tax-deferred at the personal level for a PRC tax-resident settlor until distribution — must be tested against the current rules on a case-by-case basis. Where a PRC tax-resident settlor retains control, or where a PRC tax-resident beneficiary receives economic benefit, the offshore trust may not achieve the deferral outcome it was structured for a decade ago. This does not eliminate the succession, governance, and asset-protection value of an offshore trust for a PRC family with cross-border wealth. It changes the tax dimension of the value proposition. Families with existing offshore trust structures set up under the earlier assumption should engage qualified PRC tax counsel to re-diligence the structure against the current rules and the specific circumstances of the settlor, trustee, and beneficiary residence.
The Singapore, Cayman and BVI trust regimes are unaffected in their own terms by PRC tax reform — a Singapore trust remains taxed as set out in the IRAS e-Tax Guide on Trusts, and a Cayman or BVI trust remains a tax-neutral vehicle in its home jurisdiction. What changes is the PRC-side attribution outcome for a PRC tax-resident settlor or beneficiary. The trust jurisdiction selection question therefore separates into two: which trust jurisdiction offers the strongest governance, asset-protection, and administrative framework for the family's cross-border wealth (a substantive law question), and how the PRC will treat the arrangement for its own tax purposes (an anti-avoidance question that turns on residence, control, and economic benefit).
| Dimension | PRC Family Trust | Singapore Trust | Cayman / BVI Trust | |
|---|---|---|---|---|
| Governing statute | PRC Trust Law (2001); 37号文 (2018); 2023 three-classification framework; 2025 NFRA consultation | Trustees Act; Trust Companies Act 2005 (MAS-regulated licensed trust companies) | Cayman Trusts Act; BVI Trustee Act; VISTA / STAR trust regimes | |
| Minimum property | RMB 10 million (37号文) | No statutory minimum; commercial minimums set by trustee | No statutory minimum; commercial minimums set by trustee | |
| Forced heirship insulation | Limited; interacts with PRC succession rules | Available in defined circumstances subject to Singapore trust law | Strong (Cayman: firewall legislation; BVI: forced heirship exclusions) | |
| Trust-level tax | No dedicated regime; taxed event-by-event under ordinary rules | Trustee rate 17% on retained income (IRAS e-Tax Guide); QFT and s13 exemptions where conditions met | Tax-neutral in home jurisdiction | |
| PRC settlor / beneficiary look-through risk | N/A (domestic) | Attribution turns on PRC anti-avoidance rules; verify against MOF/STA publications | Attribution turns on PRC anti-avoidance rules; verify against MOF/STA publications | |
| Disclosure environment | NFRA supervisory reporting; trust company confidentiality | MAS-supervised licensed trust companies; beneficial ownership register regime | Beneficial ownership register regimes (Cayman BOTAM; BVI BOSSs) with defined access | |
| Typical setup and annual cost | Onshore trust company fees; scale-based | Licensed trust company setup and annual fees (higher than offshore); 9% GST on services | Trustee setup and annual fees (typically lower than Singapore for standard structures) | |
| Best-fit use case | Onshore RMB wealth, PRC-domiciled family, succession of onshore operating business | USD / multi-currency wealth with a Singapore family office nexus; cross-border succession with Asia anchor | Cross-border wealth with strong forced-heirship insulation needs; PTC structures for complex family groups |
Common pitfalls
Treating the 37号文 criteria as guidelines rather than gating conditions
A vehicle that fails any of the 37号文 criteria — single individual or family settlor, RMB 10 million minimum, family-member beneficiaries, settlor not sole beneficiary, family wealth purpose — is not a family trust for regulatory purposes and defaults into the 资金信托 / asset management trust category, with different marketing, distribution and reporting consequences. The corrective is to design the trust deed and beneficiary schedule against 37号文 before signing.
Assuming pre-2020 offshore trust tax deferral still holds
Structures set up on the assumption that accumulation inside an offshore trust would be tax-deferred at the PRC tax-resident settlor's personal level should be re-diligenced against the 2019 Individual Income Tax Law residence-based framework and the 2026 MOF/STA offshore trust announcement (verify to primary sources). The corrective is a fresh tax opinion on residence, control, and economic benefit — not a repeat of the original memo.
Confusing a charitable trust with a private foundation-style vehicle
PRC charitable-donation tax deductions attach to donations to trusts that satisfy the Charity Law recognition conditions and are properly filed with the civil affairs authorities. A trust styled as charitable but administered for the settlor family's benefit does not attract the deduction and may attract adverse tax and regulatory attention. The corrective is to structure the arrangement under the Charity Law framework from the outset if the charitable characterisation is intended.
Choosing trust jurisdiction on cost alone
A trust that is cheap to set up in Jurisdiction A but leaves the family exposed on forced heirship, disclosure, or PRC attribution risk is not the best outcome for the family. The comparative dimensions include statutory framework, trustee licensing depth, disclosure regime, cost, and — for PRC-connected families — attribution risk. The corrective is a matrix comparison against the family's actual profile, not a headline fee comparison.
Confusing Singapore family office (13O / 13U) with a Singapore trust
A Singapore Section 13O or 13U family office is a fund tax incentive on a fund vehicle managed by a Singapore family office; it is not itself a trust. A Singapore trust — governed by the Trustees Act, administered by a Trust Companies Act 2005 licensed trust company or a private trust company arrangement, and taxed under the IRAS trust rules — is a separate structural layer that may sit above or alongside the family office. The corrective is to keep the fund tax incentive question and the trust structuring question in separate workstreams with separate advisors.
Frequently asked questions
- Is the PRC Trust Law actually being revised in 2026?
- The PRC Trust Law (中华人民共和国信托法) was promulgated in 2001 and has been the subject of long-running revision discussion. As of publication date, what is on the public consultation record is the NFRA 2025 draft revision of the Administrative Measures for Trust Companies (信托公司管理办法) — a subordinate regulation, not the Trust Law itself. The underlying Trust Law remains the 2001 text. Readers should track NFRA and NPC (全国人大) publications for the current status of any Trust Law amendment work.
- What is the 37号文 family trust definition, precisely?
- The 2018 CBIRC letter numbered 信托函[2018]37号 defines a family trust as a trust in which the settlor is a single individual or a single family; the primary purpose is the protection, succession, and management of family wealth; the entrusted property has a value of at least RMB 10 million; the beneficiaries include family members of the settlor; and the settlor is not the sole beneficiary. A trust that fails these criteria does not qualify as a family trust for the purposes of the differentiated regulatory treatment.
- Does the 2026 MOF / STA offshore trust announcement mean offshore trusts are no longer useful for PRC families?
- No. What the direction of travel indicates is that the tax dimension of an offshore trust for a PRC tax-resident settlor or beneficiary can no longer be assumed to deliver deferral without further analysis. Offshore trusts continue to deliver succession, governance, forced-heirship insulation, and cross-border administration value independent of tax. The right response is a fresh diligence exercise with qualified PRC tax counsel on the specific facts of the settlor, trustee, and beneficiary residence, not a blanket assumption that the structure is either broken or safe. Exact circular numbers and effective dates should be verified against the MOF and STA primary sources at the time of reading.
- How does a Singapore trust compare to a Cayman or BVI trust for a Chinese HNW family?
- The three jurisdictions differ on statutory framework depth, trustee licensing regime, forced-heirship insulation (Cayman firewall legislation and BVI VISTA are historically stronger on this dimension than Singapore), disclosure environment, and cost. Singapore trusts are administered by MAS-regulated licensed trust companies under the Trust Companies Act 2005, and trust income is taxed at the trustee rate (currently 17%) with defined exemptions under the IRAS e-Tax Guide on Trusts. Cayman and BVI trusts are tax-neutral in the home jurisdiction and have longer-established firewall regimes. The choice turns on the family's asset mix, currency, beneficiary residence, and governance preference — not on a universal ranking.
- Can Anlian Group set up a Singapore trust for our family?
- No. Anlian Group Pte. Ltd. is not a licensed trust company under the Singapore Trust Companies Act 2005 and does not hold a Trust or Company Service Provider (TCSP) licence. Trust deed drafting and trusteeship engage separately regulated licensed trust companies and qualified legal counsel. What ALG provides is the corporate services and immigration setup on the Singapore side — incorporation, employment pass and PR advisory, ACRA filings — and coordination between the family, qualified Singapore trust counsel, and a licensed trust company counterparty that the family (or their PRC advisors) selects.
- Where does the Singapore family office (13O / 13U) fit relative to a trust?
- A Singapore Section 13O or 13U family office is a fund tax incentive administered by MAS on a fund vehicle managed by a Singapore family office. It is not a trust. A trust may sit above the fund vehicle (holding the fund units on behalf of family beneficiaries), or the family may hold the fund vehicle directly without a trust layer. The two design choices — fund tax incentive and trust structure — are separate and should be worked in parallel with the respective specialists. Anlian Capital Pte. Ltd. (MAS Capital Markets Services Licence CMS101702) is the appropriate counterparty for the fund management side; licensed trust counsel is the appropriate counterparty for the trust side.
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