The Common Reporting Standard (CRS)was designed to combat tax evasion by requiring financial institutions to identify non-resident account holders and share their financial information with their home countries’ tax authorities. CRS has significantly increased global transparency, enabling automatic data exchange between over 100countries and effectively ending offshore secrecy.
Now, Chinese tax authorities are actively using CRS data to uncover hidden offshore income and assets of China tax residents, making tax compliance and risk management a top priority for taxpayers.
CRS Data Flowing to China Tax Authority: What’s Exchanged About You
China joined CRS in 2015 and began automatic exchanges in 2018. Over the past eight years, China has engaged in CRS exchanges with over 100 jurisdictions, including Hong Kong, Singapore, BVI, and Cayman Islands—key destinations for Chinese overseas investment. As a Chinese tax resident, any foreign financial accounts are subject to automatic CRS reporting.
Under CRS requirements, financial institutions serve as the primary entities for information exchange. These include:
- Depository Institutions (e.g., banks)
- Custodial Institutions (e.g., trust companies)
- Investment Entities (e.g., private equity funds)
- Specified Insurance Companies (e.g., life insurers, annuity providers)
- What kind of information about your overseas income and assets will be exchanged?
The information exchanged typically include:
- Account holder details: Name and account number
- Account status: Year-end balance or value
- Income streams: Interest, dividends, and proceeds from financial asset sales; Overseas employment income (salaries); Other income deposited into the account.
An offshore holding company （i.e., Cayman Holdco） with minimal active operations may be classified as a Passive NFE. If this entity holds a financial account in a CRS-participating jurisdiction (e.g., a bank), the institution must "look through" the structure to identify and exchange data on its Controlling Persons (typically the Chinese individual investor).
From Data to Action: China Tax Authority Is Now Acting on Your CRS Data
After nearly eight years of CRS information exchange, China tax authorities have obtained substantial data on overseas income and assets of Chinese tax residents. China tax authorities have been analyzing the CRS data and cross-referencing it with domestic tax filing information.
Many Chinese tax residents holding overseas assets have received notices from tax authorities requiring them to conduct self-inspections and pay additional taxes on their overseas income. In January2026, the State Administration of Taxation officially issued a notice requiring individual residents of the mainland to conduct self-inspections and pay additional taxes on their overseas income for the years 2022 to 2024 (the past three years).
What You Need To Do for CRS Compliance
In the CRS era, Chinese tax residents' overseas assets and income are becoming transparent. If there are unreported overseas income sources in the past, you may face tax assessments and penalties. The key is to embed compliance and optimization considerations into your global portfolio.
Tax residency is not equivalent to nationality, it's influenced by many factors, such as your habitual place of residence and usual place of work, and involves complex technical judgments which need to be carefully assessed.
Chinese tax residents may hold various types of overseas assets and income. Which types constitute China individual income tax taxable income, how to calculate the taxable amount and how is the taxable period all require carefully analysis.
Adopting a proactive and structured approach in responding to China’s tax authorities transcends mere question-answering. It is critical to manage risk and fosters long-term, cooperative compliance relationships.
Effectively managing both your tax residency status and your overseas investment structures is paramount, as both directly determine your tax liabilities under CRS.
How We Can Help
In the new era of full transparency for overseas assets and income, proactive planning is key to staying compliant, protecting wealth, and ensuring stable growth. We can help:
- Assess your tax resident status and offshoretaxable income
- Provide support on tax investigation andself-inspection under CRS
- Advice on tax compliance and optimized solution
