How the owner arranges things in an age of information transparency
While the company goes overseas, the owner's own overseas accounts and shareholdings have come into view for information exchange as well.
Not any more. CRS exchanges financial account information back to the country of tax resi…
Possibly,but not necessarily. A BOI exemption pushes the effective tax burden in Thailand…
I run a factory. What has CRS got to do with me?
Your personal account and shareholding information overseas gets exchanged back to China. Once the corporate structure is compliant, the shareholdings and money arrangements in your own name need the same review.
Does holding through an offshore shell company still work?
If the only purpose was to hide, it no longer hides. The thinking has to move from concealment to a compliant arrangement — redesign the holding structure with the CFC rules in view.
Do I need to restructure right away?
Not necessarily. The first step is to get a clear picture of where you actually stand: which information will be exchanged, and what carries a reporting obligation. Then decide whether to move anything, and how.
Are accounts held in Thailand within the scope too?
Thailand has joined the international information exchange network and is putting it into effect in stages, so accounts held in Thailand are in view as well. For the exact scope, go by the official lists and timetable — do not count on slipping through.
Will my Thai bank account be reported back to China?
It turns on whether you are still a Chinese tax resident. As long as you are, information on your Thai bank, brokerage, fund and cash-value insurance accounts is reported by the Thai financial institution to the Thai Revenue Department, and from there it goes to China's State Taxation Administration once a year under the exchange. A small balance, living in Thailand, or a change of passport does not alter that. Whether you still count as a Chinese tax resident is worth checking case by case with our consultants.
What exactly does CRS exchange about my accounts?
Far more than the balance. The fields exchanged include the year-end balance or value, interest, dividends, other income and gross proceeds from disposals (the total sale amount, not the net gain), plus the full identity details: name, address, tax residence jurisdiction and taxpayer identification number (TIN). What the tax authority receives is data, not a conclusion; whether any tax is owed depends on what has been filed, and is worth checking case by case with our consultants.
Are accounts held in my company's name within scope too?
It depends how the company is characterised. An active operating entity and a passive non-financial entity are treated differently — the latter must be looked through to its controlling persons, whose details are identified and exchanged along with the account. So "the account is in the company's name" does not by itself create separation; what decides it is what the company actually does and how its income is composed. Holding vehicles and shell companies fall most easily into the category requiring look-through.
What is a "passive non-financial entity", and why might my holding company be one?
Broadly, an entity whose income comes mainly from holding assets rather than from real operations. The test looks at the composition of income and assets, not at the company's name or where it is registered. The offshore holding vehicles common among Chinese owners, and companies that simply hold shares or property, fall into it readily — and once they do, the financial institution must identify and report the controlling persons, looking through to natural persons.
Are CRS and CFC the same thing?
No — they are two ends of the problem. CRS addresses information: account details are exchanged back to the jurisdiction of tax residence. CFC rules address taxation: where an offshore company earns profits and does not distribute them, those profits may, on certain conditions, be treated as distributed and taxed on the resident's share. One governs what can be seen, the other what can be collected. Watching CRS alone leaves the other end open.
Our Thai company has never sent profits home. Is that a problem?
It can be. Not distributing is not itself a problem, but where long-term non-distribution, a low offshore tax burden and control by a domestic resident occur together, controlled foreign company rules may be engaged and the profits treated as distributed. Projects enjoying a tax exemption need particular care — the exemption lowers the effective offshore burden, which makes the line easier to cross rather than harder. The tests involve control criteria, tax-burden thresholds and exemptions, and have to be assessed against the specific facts by an adviser.
I have lived in Thailand for years. Am I still a Chinese tax resident?
That is decided by each jurisdiction's own residence rules, not by where you have spent the most time. The two apply different tests, and you may be treated as resident in both, in which case the treaty tie-breaker applies. This is the starting point for everything else — until residence is settled, filing obligations, CFC application and treaty benefits cannot be assessed at all. It is worth settling first, before changing any structure.
Knowing all this, what is the first thing to do?
Take stock before moving. The most expensive mistake here is not "having made no arrangements" but acting before the position is clear — hurriedly moving accounts, changing shareholdings or dissolving entities leaves a trail that is harder to explain, precisely because the information is already transparent. The sensible order is: set out residence, the ownership chain, where the accounts are, and what each entity actually does; then judge whether there is a problem and where it sits; and only then discuss whether anything should change.
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A few questions gets you a preliminary read, and then you decide whether to go deeper.
中文版 · Chinese version