Mainland Chinese tax authorities in Shanghai have been sending residents notices about possible tax liabilities on “offshore trusts” that, on follow-up, turn out to be tied to ordinary Hong Kong Mandatory Provident Fund (MPF) accounts — the compulsory retirement-savings scheme that covers most Hong Kong employees — according to South China Morning Post reporting published 11 October. In one case the paper detailed, Shanghai resident Michelle Zhao received a text message from the Hongkou district branch of the Shanghai Municipal Tax Service suggesting she might owe tax on offshore-trust gains, despite never having held a trust of any kind. A follow-up phone call from the tax office clarified that the alert was linked to an MPF account her former employer had opened for her in 2022, while she was working in Hong Kong.
SCMP said the case was not isolated: posts on the mainland social platform RedNote describe similar confusion from other MPF holders, and one of the paper’s own reporters said he received a call from the Shanghai tax bureau about his Hong Kong MPF account. The pattern, as reported, points to a narrower group than “every MPF holder” — mainland Chinese tax residents who worked in Hong Kong at some point and accumulated an MPF account through that employment, rather than Hong Kong permanent residents who are not mainland tax residents.
The notices follow new rules from China’s Ministry of Finance and the State Taxation Administration governing individual income tax on offshore trusts, detailed in an announcement that took effect in late July. Under the rules, mainland tax residents face a 20% tax on gains realised when assets are placed into an offshore trust, and 20% annually on income the trust subsequently generates; people who settled assets into trusts between 2023 and 2025 were given a grace window to declare them. Ministry guidance and prior reporting on the rules have focused on discretionary trust structures that wealthy families use to hold shares, property and other assets offshore — not statutory, employer-based retirement schemes. Zagdim covered that broader rollout on 8 October, reporting that wealth managers in Hong Kong and Singapore were assessing clients’ exposure to the new tax.
Nothing in the rules themselves reclassifies MPF as an offshore trust, and no change to MPF’s legal or regulatory status has been reported. SCMP’s reporting indicates the MPF notices have arisen from how individual cases are being flagged and interpreted at the local level, rather than from a deliberate policy decision to treat statutory MPF savings as trust assets — people with ordinary MPF accounts appear to have been swept up alongside genuine offshore-trust holders. Separately, the State Taxation Administration has been running training sessions for local tax officials to standardise interpretation of the offshore-trust rules nationally and has circulated draft guidance to law and accounting firms, according to earlier reporting — an effort that, if effective, should reduce the kind of inconsistent local enforcement that appears to have produced the MPF notices.
Neither the Shanghai Municipal Tax Service nor the State Taxation Administration has issued a public statement specifically addressing MPF accounts, and Hong Kong’s Mandatory Provident Fund Schemes Authority (MPFA) has not commented publicly on the reports as of this writing. Because the burden of clarifying a notice has so far fallen on the individual who receives one, mainland tax residents with a Hong Kong MPF account from past employment may want to keep relevant records on hand — such as the original MPF enrolment confirmation or scheme statements — in case they are contacted.
