Deloitte CN Legal Yangchan and Jamison

The Modern Family Trust - Wealth, Legacy, Controversy
13 December 2019 Information Classification: External

Agenda
Topic Speaker(s)
Introduction Victor Yang
Tax Perspectives of the modern day trust Patrick Yip
The legal landscape of trusts - HK and Asia Winnie Chiu
A Trustee's Perspective Melanie Ison
Tea / Coffee Break
Family Office & Governance Christian Stewart
The recent Hong Kong landmark trust case Roger King
Panel Discussion Moderator: Peter Chen

Panelist: Speakers of the day & Jeffrey Ip
© 2019 Yang Chan & Jamison. All rights reserved. 2

Introduction

Introduction of Yang Chan & Jamison
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Privacy Law Consulting
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Governance

Tax Perspectives of the modern day
trust

Contents
Key points and hot topics of PRC IIT reform 03
Impact of PRC IIT reform on PRC tax residents holding offshore 06

companies
Offshore Family Trust 09
29

Key Points and Hot Topics of PRC IIT
Reform

Key Points and Hot Topics of PRC IIT Reform
• PRC-domiciled Individual • Anti-avoidance rules
• Individual physically present in • Transfer pricing rules

the PRC for 183 days or more • Controlled foreign
corporations
• Worldwide taxation
• Deemed sale rule?
PRC Anti-
Resident avoidance
Taxpayer rules
Tax • A single category

• If a taxpayer has unpaid or Clearance Comprehensive "comprehensive income” is
before Income
underpayment of tax, the consolidated from original
unpaid or underpayment of emigrating four categories of income
tax shall be settled
before the cancellation of the • New itemized deductions
household registration. If the
taxpayer has an installment • 30% charitable deduction
tax obligation to the tax
authorities, the obligation
would have to be settled
before the de-registration of
“hukou”.
*Note: The final implementation regulations for the amended IIT law became effective on January 1,
2019 while some measures had been effective in October 2018.

“Five-Year-Rule” to “Six-Year-Rule”
Non-PRC sourced income derived by Has been physically present in the

non-PRC-domiciled individuals which Notify the tax
PRC for 183 days or more in
is paid by non-PRC companies or authorities in
non-PRC individuals is exempted every calendar year but not for
six consecutive years charge
from the IIT
Physically present in the PRC for less than183 days in any tax
year
How to break the
six-year period Leave China for a period of more than 30 days consecutively in
one trip within a tax year
When to start counting the first

six-year period under the new January 1, 2019
law
What happens if the six year Uncertain

tax threshold is missed

Impact of PRC IIT Reform on PRC Tax
Residents Holding Offshore
Companies

Impact of IIT Reform on High Net Worth Individuals – Anti-avoidance Rules
China tax authorities would initiate tax adjustments and collect underpayment with overdue
interest in the following situations:
Controlled Foreign General Anti-

Arm’s Length Principle
Corporation Rules avoidance
Rules
When the transaction When a resident When an individual

between an individual individual controls an obtains improper tax
and his/her related enterprise established in benefits through an
parties do not comply a jurisdiction with arrangement that lacks
significantly lower reasonable business
with arm’s length
effective tax rate and the purposes.
principle and the
noncompliance cannot enterprise does not
be justified distribute a reasonable
profits than it should
without justification.

Anti-avoidance rules – Deemed sale rule
Final implementation regulations -------

Ø Under Bulletin [2014] 67 Article 13 issued by the State Administration of Taxation (the “SAT”), income
from transfer of company shares that meets one of the following conditions is significantly lower and is
considered to be justified.
Ø Inheritance or transfer of shares to a spouse, parent, child, grandparent, grandparent, grandchildren,

grandchildren, siblings, and dependents or supporters who have a direct parenting or support
obligation to the assignor person.
Ø The draft implementation regulations article 16 introduces a deemed sale rule under an individual
would be considered as selling property and deriving gains for IIT purposes if the individual transfer
properties in exchange for other property or for purposes of donation, the repayment of a debt,
sponsorship, investment, etc., unless otherwise stipulated by the financial and taxation authorities of
the State Council. The article 16 is not included in the final implementation regulations. But will this
rule ever become law as it is not included in the main statute? If effective, will it be retroactive to Jan
1, 2019?

Offshore Family Trust

Commonly Seen Family Trust Structure
Settlor Beneficiaries
• Tax residency? • 20% PRC IIT tax upon
• Reserved powers? distribution
Key Trust Documents
• Deed of Trust
• Letter of Wishes
Settlor Beneficiaries
Gift Transfer Irrevocable Trust
• Taxable? (e.g. BVI)
100%
Protector
Trust Assets
Trust Assets
• PRC tax exposure?
• Circular 37 registration?
• Bulletin 7 issues?

The legal landscape of trusts
- HK and Asia

Contents
1. Setting up a Trust: 10 years ago and in the future
2. What is a Trust?
3. Governing Law of a Trust
4. Succession Planning as a matter of Risk Management
5. Major Concerns: Assets, People, Tax, Tools and Time
6. Basic Trust Structure, Document and Operation
7. Sit Back and Relax after setting up a Trust?

Setting up a Trust: 10 years ago and in the future
• Information
• Demand
• Professionals
• Costs
• Receptiveness

What is a Trust?
“The Trust has its origin in medieval times (e.g. landowner employed
a trusted agent to hold his land for the benefit of the landowner and
his heirs).” 1
"Trust" refers to the legal relationship created inter-vivos or on death

by a person (Settlor), when assets have been placed under the
control of a Trustee for the benefit of a Beneficiary or for a
specified purpose ……" 2
Major Characteristics:
• Trust funds are separate/segregated fund (not part of the Settlor's properties)
• Trust funds are held under the name of the Trustee or its nominees
• Trustee has the power and duty to manage the Trust assets for the benefits of the beneficiaries
Source: 1 Lawrence Ma, Equity and Trust Law in Hong Kong (2nd ed) at P. 307
2Article 2 of the Hague Convention on the Law Applicable to Trusts and their Recognition (1985) incorporated into the law of Hong Kong by the Recognition of Trusts Ordinance
(Cap. 76), Steven B Gallagher, The Law of Equity & Trust in Hong Kong at P. 74

Governing Law of a Trust
Popular Jurisdictions:
• British Virgin Islands
• Bahamas
• Cayman Islands
• Guernsey
• Hong Kong
• Jersey

Succession Planning as a matter of Risk Management
• Global assets
• Children in different high tax jurisdictions
• Marriage
• Divorce
• Avoid/minimize family disputes

Major Concerns: Assets, People, Tax, Tools and Time
a) Assets
• Deposits in banks
• Shares (private/listed companies)
• Real properties
• Life insurance policies
• Other types of assets?

b) Beneficiaries
• Spouse
• Children
• Grandchildren
• Parents
• Relatives
• Friends
• Other people/organizations

c) Plan/Tools
• Will
• Trust

d) Time
• Plan ahead
• Take action ASAP

Basic Trust Structure, Document and Operations
a) 3/4 party relationship
• Settlor
• Trustee
• Beneficiaries
• Protector

b) Basic structure
（Settlor) (Protector)
（Trustee）（Beneficiaries）
Trust
Offshore Holding
company
Offshore Offshore Offshore Offshore

company (1) company (2) company (3) company (4)
Bank Real Operating Stock/

accounts Properties Co. Shares

c) Major documents
• Trust Deed
• Letter of Wishes
• Asset Transfer Documents

d) Possible Operations
e.g.
• A beneficiary can use/enjoy the Trust assets (e.g. the right to live in a property held by the Trust)
• A beneficiary may receive distributions on specific dates (e.g. birthday, graduation, wedding)
• A beneficiary may receive distributions to pay for his/her expenses (if needed)
• A beneficiary may borrow from a Trust’s underlying company (e.g. for investment/business purposes)

e) When does a Trust accomplish its mission?
• When all the assets under the Trust are distributed
• Beneficiaries may set up their own family trusts after receiving distributions from the Trust set up by their
parents

Sit Back and Relax after setting up a Trust?

A Trustee's Perspective
When/why/how things go wrong

At the beginning:
A number of different reasons for creating a trust
Are the reasons still valid
Have circumstances changed
Set deadlines (e.g. pre-IPO) create urgency but may create
problems
Advisers may have different approaches

The importance of being involved:
Multiple advisers
How much does the trustee know
Choosing trustee wisely
Circumstances that might hinder the ability for information to be obtained
But also often are the parties that are most closely connected with the
family to spot warning signs
Regular trustee meetings – important but often overlooked
Proactive

Managing expectations
Trust deed content
Assumptions vs reality
Transitioning to next generation
Care on holding family businesses
Understanding trustees involvement at all levels
Matters only usually come to light on a trigger event
Key family decision makers (the default contact)

Considerations/options:
Is use of a trust the right solution
Stress tests
Periodic reviews due to ever changing landscapes
Forum for open communication
Identify early on and act on it
Advisers – involve trustees as early as possible
No family is perfect, despite how it looks on the outside
Recognise when experts need to be brought in
Information gathering is key
Ask the awkward questions!

Family Office & Governance

Can a Family Trust preserve
Family Harmony?
The Family Governance

perspective
Christian Stewart
Family Legacy Asia
The value of family harmony: is it an espoused value or an enacted value?
39
Culture eats Structure for Breakfast
40
Can you see the whole Elephant?
41
How can you help develop collaborative skills?
42
Is there a regular family meeting?
43
How can you ensure there is a good trustee & beneficiary relationship?
44
Who are the family elders?
45
Is there a way to prune the tree?
46
Ownership
Where does a
trust fit into
the three
circle model? Family Management
47
Conflict is inevitable …. but War is not
48
How can you use a trust to invest in the family human & intellectual capital?
49
References
• Family Trusts, a Guide for Beneficiaries,

Trustees, Trust Protectors and Trust Creators
by Hartley Goldstone, James E. Hughes Jr., and
Keith Whitaker, 2016, John Wiley & Sons
• Family Wealth, Keeping it in the Family, by
James E. Hughes Jr., 2004, Bloomberg Press
• Culture does indeed eat structure for
breakfast, Matthew Wesley, December 2014,
http://www.thewesleygroup.com/blog/?p=60
9
• Solutions for infighting among Asian Business
Families, SCMP, 6 June 2015, Randel Carlock
and Loh Keng Fun
50
For more information, including articles to
download and videos to watch, please visit
our web site www.familylegacyasia.com
51
The recent Hong Kong landmark trust
case

When Trust Fails and Family Civil War
Breaks Out:
Great Eagle Holdings Case Study
Professor Roger King, PhD

Founder & Director, HKUST Tanoto Center for Asian Family
Business & Entrepreneurship Studies
Adjunct Professor of Finance
rking@ust.hk
Can a Family Trust Help Achieve the 3Ps?
Preservation of wealth for future

generations
The Three Preservation of harmony amongst

Preservations descendants
Preservation of family name, legacy,

values, and social capital
Great Eagle
鷹君
羅鷹石羅杜莉君
Lo Ying-shek Lo To Lee-Kwan
A family portrait taken around 1964 (Photo credit: Forbes)

Sibling Rivalry between
Highly Entrepreneurial & Talented G2
Nina – Founded Annie – University Antony – Founded YS – Owned several listed KS – First trained as a
Boldwin Construction graduate Hang Shing companies in HK e.g., cardiologist; restructured GE
with husband & BF Construction Century City, Paliburg, and expanded the Group to
Construction (liquidated) Regal Hotels, & include Champion REIT &
Cosmopolitan Int’l Langham Hospitality
Vincent – Founded listed Archie – Cardiologist, Gwen – Lawyer & Lu – Worked in Great Eagle
companies Shui On Group, Shui experienced investor, founded a law firm initially; set up Sun Fook
On Land & SOCAM Development; & family doctor of the Kong Group, later listed as
signature project “Xintiandi” is Lo’s a property & construction
Shanghai’s landmark firm
The Lo Genogram
Ying- Lee-
Shek Kwan
Lo Lo To
1913-2006 1919-
NED
Nina Annie Antony YS KS Vincent Archie Gwen Lu
ED ED Chairman, NED NED

MD & ED
Alexander
ED
Male Female Deceased
Evolution of the Lo Family & Great Eagle
1955 1972 1983-84 2006
Ying-shek Great Eagle Great Eagle was near bankruptcy following the Ying-shek died at the age of
started a listed in HK; HK monetary crisis. GEH sold the Regal Group to 93. Three weeks later, Lu
property branched from Bill Wyllie for a bargain price of HK$100 million, in sold his 9% of Great Eagle
business after industrial a deal structured by YS, who subsequently took shares, reducing the
departure from property into over the Regal Group. This act was seen as a family’s holding to around
Lo Shui Hing, office, hotel, & betrayal to the family. YS was removed from the 50%. KS has kept
the family residential GEH’s board. KS was asked to lead corporate increasing his
trading properties. restructuring. The Lo Family Trust was set up, shareholding since then
company. with the first Letter of Wishes drafted in 1988. to ensure family control.
1963 1971 1980-81 1987 1998 2004 2009

Great Vincent KS returned & Lu set up Ying-shek & Shui Sing, the family Trust began
Eagle founded shadowed Ying- SFK, got Madame Lo holding company for 44% distributing
was Shui On, shek & YS to run listing in detached of Great Eagle shares, cash to
founded. with a loan Great Eagle; YS 1990, & themselves as redistributed the shares beneficiaries.
of listed Regal Hotels sold its Appointers of to the Trust and individual
HK$100k & used the fund Shell the Trust; family members; Lu
from Ying- raised to acquire a company replaced by controlled SFK due to
shek. listed shell for in 1996. Nina, KS, & dispute with family
Paliburg in 1981. Lu. shareholders.
The Lo Family Trust
• A discretionary trust established in Hong Kong in 1984
• Settlors: Ying-shek & Madame Lo
• Appointers: Initially Ying-shek Lo & Madame Lo; subsequently
replaced by Nina, KS, & Lu to remove estate duty exposure in
1998
• Trustee: HSBC International Trustee Limited
• Beneficiaries: All 9 G2 members and then offspring plus
charity
• Initial Letter of Wishes (LoW) issued by Ying-shek & Madame
Lo on October 15, 1988
Trust Administration & Termination
• Notional holders of 600 shares or more can jointly make request to the Trustee
regarding the administration, management and termination of the Trust.
• Appointers must vote unanimously on any decision, including a decision to fire the
trustee.
• Successors to the Appointers could be appointed unanimously only by the
Appointers acting unanimously.
• If for whatever reason there is only one Appointer left, that sole Appointer
would have unilateral power in his/her hands.
• The Trustee shall not provide guarantee or indemnity unless with consent of
notional holders of 600 shares or more; and the amount of guarantee or indemnity
does not exceed 25% of the latest valuation of trust fund.
• The Trustee might resign its position, but must find a replacement.
Distribution Per Initial Letter of Wishes
• Upon the death of Asset Contributors to divide the trust fund into 1,000 shares to be
held according to the distribution table as amended by the Asset Contributors
jointly or the survivor; with no further change to the distribution table after the
death of the Asset Contributors.
• Distribution was uneven (ranging from 40 to 175 shares each), and was made
according to G2’s contribution to family, company, society, and filial piety. Each G2
was expected to take care of his/her own future generation.
• 100 shares were set aside for “charity”, which could play a critical role in
managing the trust, especially after the departure of the Asset Contributors. KS was
appointed the advisor to the charity shares (upon KS’ death then Archie; upon
Archie’s death then such person elected by notional holders of 451 shares or more).
• The LoW issued in 1988 stated that after the first anniversary of the death of one or
both of the settlors the trustee was requested to consider making distributions to the
beneficiaries of 2.5% of the trust fund each year. Distribution actually began in 2009
while Madame Lo was still alive.
Keeping It in the Family?
KS
Lu
Antony Nina Archie Charity
YS
Vincent
Annie
Gwen
Trust Deed
Madame
Letter of Lo Family Trust Lo Archie KS Public
Wishes by Gwen
Nina
HSBC International Trustee Limited
33.5% 2% 5.5% 27% 32.5%
Source: KS (August 2018)

Rounding error may occur.
The Feud Unfolded…
• In November 2015, KS proposed his son, Alexander, to join the
Great Eagle board as Executive Director. When Lu and Antony
protested, KS became upset and in the heat of the moment said that
he could use his shares to vote against them.
• A few weeks later, Lu and Antony voted in favor of including
Alexander on the board, but used the incident against KS, saying
that KS had threatened them and that he was building up a war
chest of shares to take over Great Eagle.
• The incident was said to have triggered the family feud, but KS
surmised that this incident was used simply as a story line.
Ten Letters of Wishes by
Madame Lo
• January 4, 2016: Ordering the Trustee to be guided by
the wishes of 51% of the beneficiaries by vote as to the
administration of the Trust
• February 24, 2016: Asking the Trustee to put the entire
trust fund in Madame Lo’s name
• April 8, 2016: Asking the Trustee to purchase 200,000
shares of GE per day
• May 12, 2016: Reiterating her request for the Trustee to
distribute the entire trust fund to her
• September 21, 2016: Asking the Trustee to exclude KS
and Archie from the beneficiaries’ list
• December 19, 2016 / July 27, 2017 / September 4,
2017: Asking the Trustee to purchase additional shares of
GE everyday
• September 27, 2017: Asking the Trustee to disinherit Nina
and Vincent
• December 7, 2017: Asking the Trustee to purchase
shares in GE until the Trust’s shareholding in Great Eagle
exceeds 40% - to maintain the Trust’s position as the
single largest shareholder of GE
The Feud Unfolded…(cont'l)
• In the spring of 2017, Madame Lo moved away from the
family compound on the Peak, an elite residential
neighborhood on Hong Kong Island, into a suite at the Regal
Riverside Hotel in the New Territories, a property owned by
YS. The move was accompanied by reports of ghosts and
spirits infesting her residence on the Peak.
• In May 2017, Lu was not re-appointed to the Board of GEH in
the annual general meeting. KS abstained in the vote.
• In February 2018, Lu filed a new writ accusing HSBC of
colluding with KS. Madame Lo’s court appearances had
become the talk of the town, when she was wheeled into
court, although she did not appear to be knowledgeable in
relation to her claims and allegations.
• During the open court trail in February 2019, KS during cross A photo taken of Madame Lo with YS and Lu’s branches at her 100th birthday in
examination mentioned a letter written by Antony to Lu, November 2018 (Photo credit: HKET)
exposing Lu’s scheme of isolation and manipulation of
Madame Lo, misleading her to sue the Trustee and break up
the family by disinheritance of half the siblings.
• On May 22, 2019, the Hong Kong Court of First Instance
handed down the judgment. HSBC Trustee won on all
counts. However, the ruling has been appealed, and the
feud appears to be set to roll on.
THE FAMILY FEUD
Other Contributing Factors to the Feud
• KS’s accumulation of GEH shares to 27% which
accelerated after Lu sold his 9% shortly after the death of
his father in 2006
• NAV of HK$74B with a Price-to-Book ratio of 0.2643
• Sense of entitlement: Value of GEH is 350 times in 2018
than in 1983
• KS has appointed 2 of his children to senior positions in
GEH
Lessons Learned
• Who can help manage the feud? Court? Trustee?
• Should KS give up leadership and/or ownership control of
Great Eagle–in pursuit of family harmony?
• How should KS structure his personal discretionary trust
(with HSBC as Trustee) to avoid a similar feud from
happening?
• How can KS make sure that despite the current feud, G3
members of the entire Lo family can still come together as
a successful cousin consortium in the future?
Thank You
Panel Discussion /
Questions & Answers

Speakers

Speakers
Roger King is Founding Director of both the Tanoto Center for Asian Family
Prof. Roger King Business and Entrepreneurship Studies and the Thompson Center for Business
Case Studies, and Adjunct Professor of Finance at The Hong Kong University of
Adjunct Professor,
Founder & Director Science and Technology (HKUST). His teaching and research interests include
family business, family office, entrepreneurship, and corporate and family
Tanoto Center for Asian governance.

Family Business and
Entrepreneurship Studies, Professor King was a former US Naval Officer; member of Technical Staff of Bell
HKUST Telephone Laboratories (USA); Non-Executive Director of Orient Overseas
(International) Limited and Chief Operating Officer of Orient Overseas (Holdings)
Limited, listed on the Stock Exchange of Hong Kong (SEHK); Chairman and
Education: Founder of ODS System-Pro Computers Limited; Chairman of Euro-Asia Shipyard
• University of Michigan, BSEE; Limited; Chairman of Pacific Coffee Limited; President and Chief Executive Officer
• New York University, MSEE; of Sa Sa International Holdings Limited, listed on SEHK; Independent Non-
• Harvard Business School, AMP; Executive Director of Sincere Watch (Hong Kong) Limited, listed on SEHK; Board
• HKUST, PhD (Finance);
Director of Arrow Electronics Corporation, listed on the New York Stock
• 2011 recipient of the HKUST
Honorary Fellowship Exchange; Supervisory Board member of TNT Express, listed on Amsterdam
Exchange; President of Harvard Business School Association of Hong Kong;
Chairman of the Association of Honorary Consuls in Hong Kong and Macau;
Honorary Consul for the Republic of Latvia in HKSAR; Standing Committee
Member of the Zhejiang Province People’s Political Consultative Conference; and
Council member of The Hong Kong Baptist University and HKUST.
Speakers
Christian Stewart Christian Stewart founded family Legacy Asia in July 2008 to help Asian
families preserve their family wealth for generations, by providing them with
Managing Director independent and objective advice on effective family governance. While
continuing as the managing director of Family Legacy Asia, in 2016 Christian
Family Legacy Asia also became an associate of Wise Counsel Research a nonprofit think-tank and
boutique consultancy based in Massachusetts USA, focused on matters of
wealth and philanthropy.
An Australian solicitor by background, and a former tax partner at

PricewaterhouseCoopers in Hong Kong where he ran their Trust & Private
Client practice group, he has over twenty five years of experience in advising
high net worth individuals and families on complex trust structuring, estate
planning, succession and governance matters.
Before founding Family Legacy Asia, Christian was a Managing Director and
the head of the Wealth Advisory Team in Asia for JPMorgan Private Bank for 6
years.

Speakers
Melanie Ison TEP Born and raised in Guernsey, Melanie started her fiduciary career in
1998 and moved to Hong Kong in June 2007 initially working for a
Managing Director large institutional trustee before moving to Nerine in March 2009.
PraxisIFM Nerine (Hong Kong) Ltd

Melanie was appointed as Managing Director in 2014. Melanie oversees
PraxisIFM Nerine’s growth in Asia and works with a number of
intermediaries and clients in the region, providing bespoke and tailored
Professional Affiliations:
solutions on all aspects of estate and succession planning covering
• Email：
melanie.ison@praxisifm.com • Member of The Society of Trust and Estate
multiple jurisdictions as well as providing guidance on family
Practitioners (STEP)
• Phone: +852 3125 1201 • Committee member of the STEP Hong Kong governance matters.
Education and Training sub-committee.
She has written several articles for international publications, and was
named in the Citywealth Leaders List in 2014 to 2018 and shortlisted in
the International Finance Centres Power Women Top 200 List in 2014
to 2018 and Top 100 in 2019.

Speakers
Victor Yang Patrick Yip

Managing Partner Chief Operating Officer
Yang Chan & Jamison Yang Chan & Jamison
Email：victoryang@deloittelegal.com.hk Email：patrickyip@deloittelegal.com.hk
Direct: +852 2852 6623 Direct: +852 2852 1618
Winnie Chiu Peter Chen

Partner Partner
Yang Chan & Jamison Yang Chan & Jamison
Email：winchiu@deloittelegal.com.hk Email：pgchen@deloittelegal.com.hk
Direct: +852 2852 1953 Direct: 852 2852 6311
Mobile: +852 9768 3607 Mobile: +852 6990 3998

Speakers
Jeffrey Ip
Director
Deloitte Forensic
E-Mail: jefip@deloitte.com.hk
Phone: + 852 2238 7401

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The Modern Family Trust - Wealth, Legacy, Controversy

13 December 2019 Information Classification: External

Introduction Victor Yang

Tax Perspectives of the modern day trust Patrick Yip

The legal landscape of trusts - HK and Asia Winnie Chiu

A Trustee's Perspective Melanie Ison

Tea / Coffee Break

Family Office & Governance Christian Stewart

The recent Hong Kong landmark trust case Roger King

Panel Discussion Moderator: Peter Chen

© 2019 Yang Chan & Jamison. All rights reserved. 2

© 2019 Yang Chan & Jamison. All rights reserved. 3

Yang Chan & Jamison 勤信律师事务所 is an independent Hong Kong law

© 2019 Yang Chan & Jamison. All rights reserved. 4

Corporate Commercial Employment Legal Management Private Client Service

Corporate Law, Corporate Tips-off Anonymous™ US Tax Controversy

© 2019 Yang Chan & Jamison. All rights reserved. 5

© 2019 Yang Chan & Jamison. All rights reserved. 6

Key points and hot topics of PRC IIT reform 03

Impact of PRC IIT reform on PRC tax residents holding offshore 06

Offshore Family Trust 09

© 2019 Yang Chan & Jamison. All rights reserved. 7

© 2019 Yang Chan & Jamison. All rights reserved. 8

• PRC-domiciled Individual • Anti-avoidance rules

• Individual physically present in • Transfer pricing rules

Tax • A single category

© 2019 Yang Chan & Jamison. All rights reserved. 9

Non-PRC sourced income derived by Has been physically present in the

When to start counting the first

What happens if the six year Uncertain

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Controlled Foreign General Anti-

When the transaction When a resident When an individual

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Final implementation regulations -------

Ø Inheritance or transfer of shares to a spouse, parent, child, grandparent, grandparent, grandchildren,

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1. Setting up a Trust: 10 years ago and in the future

3. Governing Law of a Trust

4. Succession Planning as a matter of Risk Management

5. Major Concerns: Assets, People, Tax, Tools and Time

6. Basic Trust Structure, Document and Operation

7. Sit Back and Relax after setting up a Trust?

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"Trust" refers to the legal relationship created inter-vivos or on death

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• British Virgin Islands

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• Children in different high tax jurisdictions

• Avoid/minimize family disputes

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• Take action ASAP

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Offshore Offshore Offshore Offshore