Beijing
, China
–November25, 2010
On november10, 2010, Amicorp gives an overview on the purposes, tax implications and value of foreign trust structures for Chinese citizens. Although there is no estate tax in China, many Chinese high net worth individuals are using foreign trusts to structure their assets. Chinese investors owning or purchasing assets outside of China are exposed to inheritance laws and taxes in the jurisdictions where they purchase their assets. Trusts ensure that assets can be transferred to the intended beneficiaries with the least administrative and tax burden.
In the aspect of the value of foreign trusts for PRC citizens, a trust is used to, for example, preserve wealth against political, economic or family uncertainty, transfer wealth to heirs in a tax-efficient manner, etc. In the aspect of typical foreign trust structure for PRC citizens, they used the trust regime in Singapore as an example. Trusts where the settlor and beneficiaries are neither citizens of Singapore nor resident in Singapore can qualify as a foreign trust under Singapore tax law, which means that a wide range of trust income (including most types of income or gains from financial instruments) will be tax exempt in Singapore. Beneficiaries will not be taxed in Singapore upon the receipt of such exempt income.Then they discuss the taxability of contribution to foreign trusts: 1) On the Contributor (i.e., the settlor of a trust); 2) On Foreign Trusts; 3) On Trustee of Foreign Trusts; 4) On the Beneficiaries. Finally, taxability of operation of the foreign trusts was illustrated.
Lehman, Lee & Xu can provide expert legal representation and counsel throughout the investment process. Beyond contract drafting, the firm can also perform due diligence on Chinese firms and projects, provide corporate and tax counsel on the structure and operation of an investment, from mere CERs purchase deal, to direct engagement in the project development with a Chinese partner, or to technologies sales/licensing and equity injections in project companies. For more information about the firm, please visit our website at www.lehmanlaw.com or call in at 010-85321919.