Core Viewpoint - China is strengthening the taxation of residents' overseas income, including income from stock trading abroad, which is subject to a 20% tax rate according to personal income tax law [1][12]. Group 1: Taxation on Overseas Income - Taxpayers have recently received notifications from tax authorities regarding the need to declare overseas income and pay corresponding taxes [1]. - The taxation on overseas stock trading is classified as capital gains, and individuals must pay taxes on each transaction, with the possibility of offsetting gains and losses within the same tax year [3][8]. - China has joined the Common Reporting Standard (CRS) for automatic exchange of tax information, allowing tax authorities to access data on residents' overseas financial accounts [3][11]. Group 2: Tax Treatment of Specific Investments - For Hong Kong stock investments, capital gains are exempt from personal income tax if traded through the Stock Connect program until June 2025; otherwise, a 20% tax applies [5]. - For U.S. stock investments, capital gains are also taxed at 20%, calculated based on the difference between selling and buying prices minus reasonable expenses [7]. - Dividend income from H-shares incurs a 20% withholding tax, while dividends from other Hong Kong stocks may not be subject to withholding but still require self-declaration [6][9]. Group 3: Tax Filing and Documentation - Taxpayers must file their overseas income tax returns through the Chinese tax authority's electronic system, even if taxes have already been paid abroad [10]. - Key documentation includes transaction records, proof of tax payment from foreign brokers, and bank statements [11]. - Failure to declare overseas income may result in penalties, including back taxes, late fees, and fines [12].