PRC’s Individual Income Tax rules: What the new announcements mean for your offshore trusts

On 24 July 2026, the PRC Ministry of Finance and State Taxation Administration introduced a comprehensive Individual Income Tax (IIT) regime for offshore trusts and trust-like arrangements established under non-PRC law, capturing structures in the Cayman Islands, British Virgin Islands and other offshore jurisdictions.

The regime is lifecycle-based – tax obligations may arise on contribution, annually during the trust’s continuation, on actual or deemed distributions, on termination, on a change of residence status, and on death or succession. Existing structures are not grandfathered, and a 90-day transitional window applies for specified historical liabilities. Affected parties should take specialist PRC tax advice and coordinate with offshore counsel to ensure any Cayman Islands or BVI trust-level response is effective under offshore law.

Campbells advises on Cayman Islands and BVI trust laws. Working alongside PRC tax advisers, we help clients understand how the new rules may affect their offshore structures and practical steps to consider.

Our team has provided a summary guide of the new rules and the offshore law considerations. Download here.