Tuesday, March 5, 2019
China is having their wealthy scrambling to avoid the nation's alternate tax regime, pushing them to protect their fortunes from the higher rates. Four major tycoons from China transferred $17 billion of their assets to trusts last year.
In a filing in Hong Kong on January 12, billionaire Sun Hongbin, chairman of real-estate developer Sunac China Holdings Ltd., disclosed that he had transferred the majority of his stake to South Dakota Trust Company. In 2017, Sun's fortune more than tripled, and the transfer on December 31st was to the sound of $4.5 billion. Sun and his family members are beneficiaries of the trust.
Chairwoman Wu Yajun, one of China’s richest women, made a similar move, as well as the minds behind food distributors Dali Foods Group Co. and Zhou Hei Ya International Holdings Co. The companies cited succession planning as the purpose of the transfers.
China's new tax law also does not spell out whether offshore trust assets are taxable, says Oscar Lie, chief executive officer at Noah International Holdings Ltd. But other tax shelter trusts may be available and more straightforward, so families are attempting to dodge the majority of the damage by a major tax overhaul. The change is being driven by China's huge debt load and a slowing economy.
See Venus Feng and Blake Schmidt, Four Chinese Tycoons Just Transferred $17 Billion To Trusts, Bloomberg, January 15, 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.