China’s Surprise Move on Capital Gains Tax Is Genius: Shuli Ren

You can’t go broke paying capital gains taxes, but you will feel the pinch — and for mainland Chinese with sizable overseas investments, a bit of apprehension.

Chinese authorities have been contacting residents who trade US and Hong Kong stocks, asking them to declare their earnings and pay tax liabilities. A 20% levy is applied to dividend income as well as annual net stock trading profits.

Many were surprised even though they shouldn’t have been. Tax residents, usually defined as people who spend at least 183 days a year in the mainland, have been required to pay taxes on their global income for decades. However, ...