China offshore trust tax crackdown could impact single stocks: BofA
China's new rule to impose individual income tax on assets placed in offshore trusts and the income they generate could pose short-term risks to certain shares as the October 22 payment deadline approaches, BofA Securities said. Offshore-listing private companies may face more scrutiny than state-owned ones, strategist Winni Wu told Reuters. "The deadline for this offshore tax is October 22, so that gives us roughly a month to see the actual impact," Wu said. She believes there is room for negotiation with local tax bureaus as some tax liabilities might be high and unrealistic to pay
-listed Chinese companies' shareholders, may create near-term pressure on some shares as the payment deadline nears, BofA Securities said. Offshore-listed private companies may face closer scrutiny, while state-owned firms are likely to be less affected, Winni Wu, BofA Securities China equity strategist, said at a media briefing in Hong Kong. Chinese authorities said in July they will levy individual income tax on assets placed in offshore trusts and the income they generate, and unpaid taxes must be settled within 90 days, a deadline that is now approaching. 59 million).
The stock has fallen 17% since then, stoking market concern over possible tax-payment effects on some offshore Chinese shares. Wu said the offshore tax deadline is October 22, leaving roughly a month to gauge the actual impact. The offshore trust tax collection could create event risks on single stocks. She said the issue may affect individual stocks, but is unlikely to be a main driver for the Hong Kong market.
Wu said company owners and shareholders could still negotiate with local tax bureaux, noting that some tax liabilities can be very high and that it is unrealistic to expect people to have that amount of cash available immediately to pay the tax. com; 852-3462-7739;