Core Viewpoint - Recent notifications from tax authorities require taxpayers to declare and pay taxes on overseas income, including capital gains from foreign stock trading, which is subject to a 20% tax rate in China [1][3]. Group 1: Taxation on Overseas Stock Trading - Taxpayers engaged in overseas stock trading are uncertain about tax obligations, especially regarding the calculation of gains and losses from multiple transactions [1][2]. - The Chinese tax authority allows taxpayers to offset gains and losses within the same tax year but does not permit cross-year loss carryforwards [2][3]. - The current tax system in China applies a flat 20% rate on capital gains from stock trading, differing from some countries that allow for loss carryforwards and apply progressive tax rates [3][4]. Group 2: Regulatory Measures and Compliance - The implementation of the Common Reporting Standard (CRS) enables tax authorities to access data on residents' overseas financial accounts, enhancing the ability to detect underreported overseas income [4]. - Recent cases from tax authorities in regions like Shandong highlight the use of big data to identify taxpayers who fail to declare overseas income, leading to significant penalties and back taxes [5][7]. - Taxpayers who do not accurately report overseas income may face additional penalties, including late fees and potential audits [7].

Core Viewpoint - Recent notifications from tax authorities indicate that taxpayers must declare and pay taxes on overseas income, including stock trading profits, as per Chinese tax law [1][2]. Taxation on Overseas Stock Trading - Taxpayers engaged in overseas stock trading are uncertain about tax obligations, especially regarding the calculation of gains and losses from transactions [1]. - According to Chinese tax law, income from stock trading is classified as property transfer income and is subject to a 20% tax rate. There is no tax exemption for overseas stock trading, and taxpayers must declare income in the following year [1][3]. - The tax authorities allow taxpayers to offset gains and losses within the same tax year but do not permit cross-year loss offsets [2][3]. Tax System Comparison - Other countries, such as the US, Germany, and Australia, also tax overseas stock trading, but they often employ a progressive tax rate system that can exceed China's flat 20% rate [3]. - China's tax system combines comprehensive and classified taxation, allowing for annual calculation of gains and losses, which is considered a reasonable approach [3]. Regulatory Measures - The tax authorities are enhancing oversight of overseas income taxation as part of efforts to regulate high-income earners and promote fairness [3][4]. - The implementation of the Common Reporting Standard (CRS) allows tax authorities to access data on residents' overseas financial accounts, facilitating the detection of underreported overseas income [3]. Compliance and Penalties - Taxpayers who fail to declare overseas income may face penalties, including back taxes and late fees. Serious cases could lead to investigations by tax authorities [6]. - Taxpayers are encouraged to correct any previous underreporting of overseas income promptly [6].

Core Viewpoint - The article discusses the obligation of taxpayers in China to declare overseas income and the current tax regulations regarding capital gains from stock trading, highlighting the lack of a loss offset mechanism for overseas stock transactions [1][6][11]. Tax Regulations on Overseas Income - In 2025, many Chinese residents investing in Hong Kong and U.S. stocks received notifications from local tax authorities to self-check their income and file tax returns [2]. - According to the Ministry of Finance and the State Taxation Administration's 2020 announcement, income from overseas sources such as interest, dividends, and capital gains must be calculated separately from domestic income [2][8]. Current Tax Policies on Domestic Stock Trading - China currently has a tax exemption policy for capital gains from domestic stock trading, meaning that losses cannot be deducted from taxable income [4][10]. - The existing personal income tax law classifies capital gains from stock transfers as "property transfer income," subject to a 20% tax rate, but specific regulations for stock trading have not been established by the State Council [8][9]. International Tax Practices - Most countries have established tax systems that allow for loss offsets in stock trading, reflecting the principle of tax fairness [3][7][15]. - Countries like the U.S., Canada, Australia, and Japan permit current year stock losses to offset gains, with some allowing indefinite carryforward of losses [15][17]. Recommendations for Future Regulations - The article suggests that China should consider international practices when formulating tax regulations for stock trading, particularly regarding loss offsets [7][17]. - It emphasizes the need for clear regulations to ensure fair tax treatment and to avoid discrepancies between domestic and overseas stock taxation [17].