Chinese family offices moving to Hong Kong take Beijing's 20% trust tax with them

If each 20% charge is taken from whatever the previous stage of an offshore-trust transaction left, two stages cost a family 36% of the starting sum and three cost 48.8% ^[21]. The source does not say how many stages a typical structure has, or what base each charge falls on. Whichever city holds the family office, the schedule is the same ^[2]. "Uncertainty has grown over the use of offshore trusts for wealthy Chinese seeking to manage assets abroad," Nikkei Asia said ^[3].

So Hong Kong's catch-up needs another explanation, and Singapore supplied most of it. After an August 2023 raid found that 10 Chinese nationals in an illegal gambling ring had laundered S$3 billion, Singapore tightened its source-of-funds checks ^[5]. Investigators said at the time that some defendants might be linked to family offices that had received tax benefits ^[6]. Approval for a family office now takes more than a year ^[7].

Singapore's official count grew fivefold from 2020 to 2024, adding 300, 400, 300 and then more than 600 offices a year ^[19][20]. The government's August release put it at "more than 2,000" at the end of last year ^[9], and the Nikkei Asia analysis describes Singapore's growth as stalled while Hong Kong's set-ups rise quickly ^[25]. Deloitte counts 3,384 single family offices in Hong Kong at the same date ^[10], a lead of at most about 1,384 ^[22]. The two cities define a single family office differently ^[11], so that gap is only a rough guide.

Hong Kong "continues to strengthen its position as a family office hub," said Horace Yep, who heads Citi Private Bank's Hong Kong business ^[13]. He held an investor event last month attended by officials from 150 family offices ^[12]. The city's goal is to help at least 220 family offices enter or expand by 2028 ^[18], about 6.5% of the Deloitte count ^[23].

There are a few ways this goes. Hong Kong can keep gaining on its own policy push even though its trusts carry the same tax ^[2]. Singapore can hold on to some of the money through the local-partner and local-entity structures a consultant there described ^[14], on the calculation that deals done in Singapore could in theory fall outside Chinese authorities' reach ^[15]. Or Beijing's rules follow those structures too, and the choice of city matters less than whether money leaves the mainland at all.

I think the evidence supports wealth managers rethinking how these clients' trusts are built. It supports moving a base only for families whose problem is Singapore's approval queue. The view is wrong if Hong Kong trusts turn out to be treated more gently than Singapore ones in practice, because then the tax itself becomes a reason to move.

Singapore's announced fix is aimed at the bank account. It will work with private banks to cut opening times to within a month from more than six weeks ^[16]. That saves at least 12 days ^[24] for a client whose family office approval takes more than a year ^[7].