Attention high-net-worth individuals! Recently, following the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC), and the Bank of China (BOC), the China Construction Bank (CCB) announced the launch of tax-related information due diligence for existing non-resident high-net-worth individual clients. With all four major banks taking action, a major storm is sweeping in. How should high-net-worth individuals plan their overseas asset allocation? Follow Worldway Immigration to learn more.
Recently, CCB announced that it would conduct due diligence on existing high-net-worth individual clients starting September 30, 2017. Clients who hold non-Chinese tax resident status and who opened deposit accounts, bank card accounts, savings treasury bonds (voucher-style, cash purchase), or other accounts requiring due diligence under the "Administrative Measures" at the bank before July 1, 2017, are required to cooperate with the bank by filling out and signing the corresponding tax resident status declaration documents before December 31 of this year.
Which banks are conducting the investigation?
In fact, it is not just the four major banks that are conducting tax-related information due diligence on existing high-net-worth individual clients. More than ten banks, including ICBC, ABC, BOC, CCB, and China Everbright Bank, have issued public announcements requiring existing non-resident clients (i.e., clients who opened deposit accounts, bank cards, treasury bonds, etc., at the bank before July 1 of this year) to sign tax resident status declaration documents via bank counters or mobile banking.
In fact, conducting tax-related information due diligence on existing high-net-worth individual clients is nothing new. The state began deploying this over four months ago. According to the timetable of the State Administration of Taxation, the pace of investigation varies for different client groups: the investigation of high-net-worth clients is more urgent, with financial institutions required to fully clarify information on individual accounts with an aggregate balance (as of the end of June) exceeding one million US dollars by December 31 of this year. For low-net-worth clients with less than one million US dollars, the deadline is the end of December next year.
Currently, banks are taking action one after another, which shows how important this matter is. It is expected that more banks will join in the future.
Who is the target of the investigation?
The "Administrative Measures" clearly state that the targets of the investigation are non-resident financial accounts. "Non-resident" refers to individuals or enterprises other than Chinese tax residents. However, non-resident is not equivalent to "foreigner." For example, holders of Chinese passports who reside overseas for a long time may also have their bank accounts held within China judged as non-resident accounts. If you are a non-Chinese tax resident and you opened any of the following types of accounts at any bank before the end of June: personal deposit accounts; bank card accounts, including debit accounts, credit accounts, quasi-credit accounts, and prepaid special accounts; wealth management accounts, and other accounts requiring due diligence under CRS, then you must declare them.
Taking the CCB personal non-resident status declaration as an example, in addition to basic information such as name, age, current residence, and place of birth, the most important thing is that non-residents must report their country (or region) of tax residence and their taxpayer identification number.
What information will be exchanged? What will not?
According to the agreement, the information that needs to be exchanged includes: information on deposit accounts, custodial accounts, funds, insurance, annuities, etc., of relevant persons held or maintained in almost all banks, trusts, securities firms, insurance institutions, law firms, and accounting firms. Personal information includes account number, account balance, name, date of birth, age, gender, place of residence, etc. Overseas real estate, jewelry, artwork, and precious metals do not belong to financial assets, so information about your ownership of such assets does not need to be exchanged.
Facing the sweeping CRS storm, high-net-worth individuals should prioritize their identity in overseas asset allocation. Holding a passport from a non-global tax-collecting country, such as Saint Lucia, Dominica, Antigua and Barbuda, Saint Kitts and Nevis, or Vanuatu, among other Commonwealth countries, is advantageous. These countries not only have developed offshore finance and superior tax systems, but are also among the few non-global tax-collecting countries. Taking a Saint Lucia passport as an example, with an investment starting from just $100,000, the whole family of three generations can quickly obtain a Saint Lucia Commonwealth passport. Conducting global asset allocation with Saint Lucia citizenship not only allows you to easily cope with CRS, but also leverages developed offshore financial centers to carry out broader overseas asset allocation in wider overseas markets.
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