Tax authorities in multiple regions have simultaneously started investigations, and many people should have recently received notification to report taxes, with amounts due ranging from over a hundred thousand to over a million. This is not baseless—data from the CRS global tax information exchange mechanism has long been interconnected, and the tax bureau has obtained details of your offshore accounts (bank cards, brokers, insurance, etc.) through financial institutions. After such a long time, they are now officially closing in.

Starting from March 2025, tax authorities in places like Fujian, Shanghai, Zhejiang, Shandong, Guangdong, etc., have begun to simultaneously initiate checks on overseas income, with reported tax amounts ranging from 100,000 to over a million.

❚ Verification Process
Reminder → Urging correction → Interview warning → Case filing and investigation → Public exposure

➤ How should taxes be paid on money earned from trading Hong Kong and U.S. stocks?
1. Dividend Tax
- U.S. stock dividends: The U.S. withholds 10% tax, and an additional 10% must be paid upon returning home (totaling 20%). Proof of tax payment must be provided for deductions, but the process is complex.
- Hong Kong stock dividends: Hong Kong has withheld 10%, and according to the tax agreement between the mainland and Hong Kong, no additional payment is required.

2. Capital Gains Tax / Property Transfer Tax
- Tax rate: 20% (calculated per transaction profit, losses cannot be deducted)
- Calculation method: Profit = Selling price - Buying price - Transaction fees.
- Key difference: A-shares are temporarily exempt from capital gains tax, but Hong Kong and U.S. stocks are subject to it.
If not reported for many years, late fees and fines may accumulate.
- Loss offset: Investment losses can offset other capital gains in the same year, and complete transaction records must be retained for review.

A few days ago, the major victim was taxed according to this method. Not only did they incur losses, but they also had to pay taxes. However, tax collection requires verification of all records, so it may not actually be calculated this way. This obviously unreasonable algorithm seems to have been thought up by some big brain without any consideration.

➤ Who will be targeted?
- Coverage: Includes over 100 countries and regions such as Hong Kong, Singapore, Europe, etc. (excluding the United States, but separately exchanged through FATCA)
- Reporting content: Identity information, account balance, transaction records, dividends, capital gains, etc.
- Exemption conditions: Accounts opened in Hong Kong before 2019 with a balance ≤ $250,000 may be temporarily exempt, but must be reported once exceeding the limit.
- Special note: Financial institutions can independently decide whether to report small accounts, so even if the amount is low, it may still be subject to random checks!

➤ How to avoid penalties?
- Long-term holding: Pay based on dividends.
- Overseas identity: Avoid dual tax residency status and utilize tax treaties to prevent double taxation.
- U.S. brokers: Interactive Brokers, First Securities, have different data exchange agreements.
- Late fees: If the tax bureau receives information about years of unreported income, late fees and fines may accumulate.
- Account cancellation? Probably useless, as data is generally kept for several years for regulatory compliance.
- Profits from crypto assets are not required to be taxed, as they are on the fringes. First, it must be acknowledged that crypto assets are legal assets; however, there may also be retroactive checks on profit data for a few years if compliance is established later.