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].

Core Viewpoint - In 2025, many Chinese residents investing in Hong Kong and US stocks received notifications from local tax authorities to self-check their domestic and foreign income and timely file tax returns, highlighting the enforcement of tax regulations on overseas income [2][3] Tax Regulations on Domestic Stock Trading - Currently, China implements a tax exemption policy for domestic individual stock transfer income, meaning that profits from trading A-shares do not incur personal income tax [4][5] - The existing personal income tax law classifies individual stock transfer income as "property transfer income," subject to a 20% tax rate on profits after deducting relevant costs [4][5] - The State Council has not issued specific regulations for taxing stock transfer income since the implementation of the personal income tax law in 2019, leading to the continuation of the 1998 notice that exempts personal stock transfer income from taxation [5][6] Tax Regulations on Overseas Stock Trading - There are currently no specific exemptions for overseas stock trading, and taxation on residents' overseas stock income is legally supported but lacks established rules [7][8] - The absence of a clear mechanism for loss deduction in the personal income tax law raises concerns about tax fairness, as losses from overseas stock trading cannot be offset against gains [8][10] International Tax Practices - Many countries, including the US, Canada, Australia, and Japan, allow for the offsetting of stock trading losses against gains, reflecting a principle of tax fairness [10][11] - These countries typically permit losses to be carried forward indefinitely for offsetting future gains, although they may not allow losses to offset prior year gains [10][11] - The comparison of international practices suggests that China could benefit from adopting similar loss offset mechanisms in its tax regulations for stock trading [11]