The Future Tax Environment for China’s High-Net-Worth Individuals

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In November 2022, rumors circulated in China suggesting the government would establish a High-Net-Worth Individual Management Bureau (HNWI Bureau) to oversee the tax affairs of the wealthy. Key points from these rumors include:

• High-net-worth individuals (HNWI) are defined as those with bank deposits exceeding RMB 10 million.
• The HNWI Bureau would conduct targeted tax audits on this demographic.
• These audits would leverage taxpayer profiling using big data modules from the upcoming Golden Tax Phase IV system.
• A proposed exit tax for emigrants would require individuals to settle all outstanding taxes before deregistering their household registration.
• Deregistering one’s citizenship would necessitate a tax clearance certificate from the tax authorities.

So, how credible are these rumors? In our view, whether or not these measures are imminent, their implementation is only a matter of time. This means that over 2.02 million households with assets exceeding RMB 10 million will soon find themselves under the close scrutiny of the tax bureau. Here’s why: