China Subject Offshore Insurance Income To Domestic

China's State Taxation Administration said offshore insurance income was subject to domestic tax, local news outlet the Paper reported, citing an official on Friday.

China will treat all residents' overseas income equally, regardless of whether it is overseas insurance income or other investment income, all income must be declared and taxed according to law.

The clarification came after reports emerged that local tax authorities were stepping up cross-border tax compliance efforts and reviewing tax residents' unreported foreign income.

Beijing and Hangzhou authorities have started to apply personal income tax rates of 20% on returns from Hong Kong insurance policies. Mainland Chinese authorities have escalated scrutiny of offshore investments in recent months, which analysts say could weigh on money flows to Hong Kong.

Taxing offshore-sourced income derived by Chinese tax residents, including returns on overseas insurance policies, is a common international practice and has been consistently upheld since the implementation of China's Personal Income Tax Law, the official said.