China inheritance tax not to come any time soon

At the end of last month, in response to an inquiry by a member from National Committee of Chinese People’s Political Consultative Conferrence, China State Administration of Taxes published on its website its reply. It said:

(1) China has not levied inheritance taxes so far, and has never published any regulation on this or even any draft regulation on inheritance tax;

(2) from its studies on this law, inheritance taxation has three characteristics:

(a)  scope of taxation is complex: estates take various forms, including real properties, bank deposits, cash, stock, securities, antiques, jewelry but also IPR; to level inheritance tax, it requires full knowledge of residents’ properties and their inheritance and devises;

(b) procedures for collecting inheritance taxes are complex:  it will entail appraisal of those various properties which will consume a lot of work and can easily result in disputes, and the procedures for dispute resolution is complicated;

(c) inheritance tax requires other auxiliary supporting mechanisms such as close coordination between different governmental departments, tax preservation measures and compulsory measures.

一是征税范围复杂。遗产形态多种多样,既包括房地产等不动产,也包括银行存款、现金、股票、证券、古玩、字画、珠宝等动产,还包括知识产权等无形资产,开征遗产税需要全面、准确掌握居民财产信息,以及遗赠、继承等具体情况。

二是征管程序复杂。遗产税需要对各类财产进行合理估价,需要大量专业人员从事相关估价工作,征管中极易产生争议,争议解决程序通常也较为复杂。

三是征管配套条件要求高。开征遗产税还需要具备相应的征管条件,如不同政府部门的紧密配合、对拒不缴税的纳税人在法律中做出税收保全和强制措施制度安排等。

The news has run comments from an expert in this area saying that China’s inheritance tax is not going to come any time soon, hinting it may never be enacted at all, citing the phenomenon that many developed countries have already stopped levying inheritance taxes since 2000, such as Australia, Canada, New Zealand, Italy and Singapore and now United States as a result of Donal Trump’s tax reform initiatives.

Overseas Chinese that have substantial assets or properties within China may not be too worried about inheritance taxes that has been in rumors for many years prompting many Chinese rich families to move their China assets outside of China.

Despite this clarification from top China tax authority, those who have substantial assets in China shall still need to explore other options to dispose of or pass on to next generation their wealth and properties.

Jason Tian

Jason Tian, specializes in foreign-related legal services ranging from foreign investment in China, banking and capital, real estate, M&A, corporate, international trade, estate planning, inheritance and divorce at his blog: http://www.sinoblawg.com.

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