China has intensified efforts to recover hundreds of billions of dollars in unpaid taxes linked to overseas investments held by its ultra-wealthy citizens, as the government confronts mounting fiscal pressures. The campaign includes retroactive scrutiny of foreign capital gains dating back as far as 2000 in some cases, according to interviews with officials, bankers, and family office managers.

Chinese banks have been instructed to review clients’ offshore assets, including real estate, equities, precious metals, and cryptocurrencies, to ensure income from these investments has been properly declared and taxed. Several bankers reported coordination with tax authorities to freeze accounts until outstanding tax liabilities are resolved, with many wealthy individuals paying fines and back taxes promptly to regain access.

Timeframes for the reviews vary. For example, one Shenzhen-based family office disclosed that clients were asked to settle taxes on offshore gains from 2017 through 2022, though no formal explanation has been provided for specific audit periods.

Analysts suggest the crackdown is driven primarily by fiscal considerations. Victor Shih, a professor of Chinese political economy at the University of California San Diego, noted that China’s tax revenues have largely stagnated since the pandemic, with a 1.7 percent decline forecast to RMB 21.6 trillion ($3.2 trillion) in 2025. Additionally, revenues from land sales, a traditional income source for the government, have fallen sharply due to a prolonged property market downturn.

Recent regulatory changes targeting offshore assets underpin the government’s campaign. In March, Chinese authorities introduced new tax rules on income generated by offshore trusts, which have historically enabled wealthy individuals to shelter assets abroad. The new regulations impose a 20 percent tax on such income, effectively closing a longstanding loophole.

A Singapore-based banker who manages offshore wealth for Chinese clients described the trust tax as “shocking,” citing that it nullifies a widely used tax shelter involving public assets like shares in listed companies. As a result, many trust holders face one-time tax liabilities, with some expected to liquidate assets to cover these expenses.

In addition to trusts, China has begun levying a 20 percent tax on dividends and interest earned from offshore policies. This move has already impacted financial markets; shares of the Asia-focused insurer Prudential dropped as much as 13 percent in London trading, while shares of HSBC fell about 6 percent.

The State Taxation Administration has not issued a response to requests for comment on the campaign or the new tax rules.