Chinese tax authorities stated they would accept reasonable explanations when implementing new rules on offshore trust income, providing some certainty to taxpayers after a successful appeal by an executive of a Hong Kong-listed company. The tax authorities clarified this Monday that stock incentive trusts established by companies are not subject to the 20% trust tax. Instead, individual income tax should be paid when employees exercise stock options or receive dividends and share transfer gains. The executive's offshore trust was established before the company's IPO in 2021, when it was valued at approximately $50 million. The tax authorities also answered other frequently asked questions, but some issues remain unresolved. China has strengthened its regulation of offshore trusts and investment income this year.