National Individual Income Tax Up 90%—Is Cryptocurrency Taxation Far Behind?

Today I saw a news report from Cailian Press, and frankly, I was still taken aback by the figures.

The State Taxation Administration disclosed that the 90-day transition period for taxing offshore trust income has concluded smoothly, with cumulative declarations of individual income tax on offshore trusts exceeding RMB 160 billion, of which more than RMB 120 billion was collected in October alone, directly driving a nearly 90% increase in national individual income tax revenue for October.

RMB 120 billion in a single month. This is not the result of some pilot city; it is a nationwide figure. In other words, the money that had sat quietly in offshore structures for years has now genuinely been called out to pay the outstanding tax.

Why Hong Kong stock owners are rushing to raise funds

If you have been observing the Hong Kong stock market, you should have noticed a phenomenon over the past few months: many controlling shareholders and actual controllers of listed companies have been raising funds intensively. Some pledged shares, some directly reduced their holdings, and some even borrowed bridge loans.

Where did this money go? A considerable portion was used to pay this offshore trust income tax.

On July 24 this year, the Ministry of Finance and the State Taxation Administration issued an announcement providing that taxpayers receiving offshore trust income must complete declaration and payment within a 90-day transition period, without late payment surcharges. Translated, this means: you are given three months to voluntarily pay what is owed, and past non-compliance is not pursued; once this window closes, late payment surcharges, audits, case filing, and public exposure will all follow without exception.

Looking back now, the design of this window period was very effective. The vast majority of taxpayers chose to cooperate, and the RMB 120 billion collected is the best proof. Those who rushed to raise funds before the transition period ended were not suddenly bearish on their own stocks; rather, they made a clear-eyed calculation: rather than racing against the tax authorities, it is better to befriend them.

In 2026, cross-border tax is the real main thread

If one traces the trajectory of domestic regulation this year, a very clear thread emerges: tax, especially cross-border tax, is an unavoidable theme for 2026.

In May and June, Futu and Tiger were investigated over cross-border securities business, and the market already felt a round of shock. Later came this taxation of offshore trusts. Further on, the nature of funds and declaration obligations for Hong Kong insurance have also been repeatedly discussed. Even cryptocurrencies—the tax authorities are already paying attention to the path of transferring assets overseas through crypto assets.

Previously, when people discussed cross-border assets, regulators to some extent turned a blind eye: not that they did not regulate, but that the priority was not so high and the tools were not so complete. But starting this year, that eye has been fully opened. From securities accounts to trust structures and then to on-chain assets, layer by layer.

Why was the collection so precise this time? Because technically, traditional offshore arrangements have long ceased to be any secret.

Under the CRS (Common Reporting Standard) framework, mainland China and more than one hundred jurisdictions worldwide automatically exchange financial account information each year. For the domestic tax authorities, the bank accounts and securities accounts you hold in Hong Kong, Singapore and the Cayman Islands—their balances, returns and account holder identities—are essentially transparent. The saying that "offshore trusts are hidden abroad and cannot be traced" became outdated long ago in the CRS era.

More noteworthy is the next step. Starting in January 2027, Hong Kong will join the CARF (Crypto-Asset Reporting Framework), under which crypto-asset service providers will also be required to report user identity information, transaction records and balances to the tax authorities, and to automatically exchange such information among jurisdictions.

In other words, what is being looked through in your bank accounts today will recur in almost identical fashion in crypto-asset accounts next year.

Crypto exchanges are themselves handing over data

There is another view circulating in the industry: investing in and holding crypto assets carries no tax risk, because of "on-chain anonymity."

That judgment does not hold even at the theoretical level. Look at the leading compliant exchanges: dedicated tax reporting interfaces have long been built into their back ends. What does that mean? It means that from the very first day of product design, the exchanges have been preparing to report data to regulators.

The logic is in fact simple. To survive, an exchange must obtain a license and maintain it. Whether the license is from the United States, Dubai, Singapore or Hong Kong, compliance obligations are part of the license, and user information exchange is the most stringent of those compliance obligations. An exchange will not, and dare not, stake its own survival on helping a user conceal a tax liability.

So "crypto assets are tax-free" has never been an attribute of the asset; at most it is a window period before regulation takes effect. A window period and an additional firewall are entirely different in their legal consequences.

The RMB 160 billion in offshore trusts once again confirms one thing: if a regulator wants to push something forward in depth, there is almost no resistance at the enforcement level. Ninety days, RMB 120 billion collected—no campaign-style enforcement was needed; one announcement plus a transition period was enough.

The same judgment holds for crypto assets.

In my view, over the next one to three years there may still be some gray space for crypto assets on tax—after all, CARF information exchange will not begin until 2027, and there are still a large number of technical and legal details to be settled regarding the tracing of historical transactions. But this really is only a matter of time, not a matter of space.

Treating "the regulators haven't found it yet" as "the regulators can't find it" is the most common and most expensive cognitive misconception in this market.

My recommendation

If you or your family do in fact have offshore assets, trust structures, or hold a relatively large scale of crypto assets, my recommendation is straightforward: tax planning should be done early, and it must be done genuinely.

"Genuinely" means making structural arrangements within the legal framework—how residency is determined, what structure the assets are placed in, at what stage the income is realized, and how filing obligations are performed; each item must have a clear basis. It does not mean relying on temporary measures such as "not reporting," "underreporting," or "switching to another wallet address" to gamble on the regulators' patience.

The problem with temporary measures is that they are never free.

The pit you sidestep today will, two years from now, make you pay it back with interest in the form of late-payment surcharges, fines, or even criminal liability. The offshore trust case this time is a ready example: voluntarily reporting during the transition period means paying only the tax that is due; being discovered after the transition period means tax plus late-payment surcharges plus fines, and in serious cases public exposure as well.

In the matter of tax compliance, arranging early is a cost, while arranging late is a price. The 120 billion already makes clear that the state is serious about this money.