Over 100 nations currently have an estate or inheritance tax of some form. China is not one of them, but that might change soon as the government is considering a decade old proposal that would institute an inheritance tax.
In recent decades, the Chinese economy has expanded greatly. As is often the case in countries that experience rapid economic expansion, most of the new wealth is concentrated in a small percentage of the population.
Whether that is a good thing or not is debatable. Governments often react to it by imposing an estate tax, which also serves as an important source of revenue.
Now that China is an economic power, it too is considering an estate tax, as reported by Want China Times in an article titled “Beijing said to be close to imposing inheritance tax in 2016.”
In the United States, the fairness of the estate tax is a hotly contested issue. What cannot be contested, however, is that the U.S. estate tax is much fairer than the Chinese proposal.
The estate tax in China would kick in when an estate is worth a mere $129,000. The heirs would also need to pay the entire tax amount in cash within 3 months or any property to be inherited would be auctioned off.
If instituted, this proposal has the potential to cause wealthy people to flee China. Consequently, this development is something to monitor for its potential impact on the world economy, as well as China’s reaction to any fleeing citizens.
Please contact our office today at 239-225-7911 to schedule an appointment with Barbara M. Pizzolato if you are interested in protecting your legacy and need to create or update your estate plan. You may also wish to attend one of our free seminars.
Reference: Want China Times (December 29, 2014) “Beijing said to be close to imposing inheritance tax in 2016”