The increasing prosperity of East Asian economies, particularly their soaring number of high net worth families, has prompted the region's national governments to step up their tax collection efforts in recent years. The corollary has been increasing regulation of financial service providers.

India has been tightening the screw through measures added to the federal Direct Taxes Code Bill. These include new taxes on offshore bank deposits, along with powers for the federal tax authority to impose sanctions on blacklisted "uncooperative" jurisdictions, and to penalise Indian taxpayers who do business with them. India's tax authorities are reported to be monitoring its citizens' travel to these countries. Even more controversially, India is introducing a general anti-avoidance rule.

China too has become more sophisticated in its approach to tax enforcement. Many Chinese-owned companies are domiciled offshore, and much outward investment is channelled through IFCs such as Hong Kong, the Cayman Islands, Luxembourg and Singapore. In 2009 the People's Republic government introduced an aggressive new definition of "beneficial owner" to enforce taxation against structures lacking substance and business purpose. The following year it imposed capital gains tax on foreign companies that sell their Chinese subsidiaries by means of an offshore intermediary.

Practitioners working with Asian clients are convinced this tide of regulation is set to continue, according to a new report, The Future Of Asian Trust And Estate Practice, on wealth structuring in Eastern Asia. More than 80 per cent of STEP members who responded to the survey agreed that the number of regulatory initiatives to increase tax compliance in Asia will go on rising.

"The tax laws in China are increasingly complex and changing rapidly," said one. "It would be utterly foolish not to fully understand those rules and make sure that you're complying with them." Another pointed out that the penalties for tax evasion in the People's Republic include capital punishment, "so you really don't want to get that one wrong".

One of the most commonly mentioned regulatory thrusts is information sharing between governments, following the last three years' flood of bilateral tax information exchange agreements. "The biggest change in our business is the increasing enforcement by the US and other governments around the world in collecting tax from non-compliant taxpayers," said one respondent.

The region's two principal international financial centres, Hong Kong and Singapore, have already had to adapt. Under threat of OECD blacklisting, both have amended their banking secrecy laws to permit information exchange with other countries on suspected tax evaders.

Hong Kong's imminent new trustee legislation will be a significant development for wealth planning in the centre, said one practitioner, bringing it more into line with Singapore where the trust industry is already regulated.

And though Singapore is still suspected (at least by Hong Kong practitioners) of being a favoured destination for "hot money" flows channelled through non-compliant tax structures, it is starting to tighten up its AML legislation. Last October, for example, the Singapore Monetary Authority announced that laundering the proceeds of tax offences is to be made a criminal offence.

Other respondents opined that the smaller trust and company service providers are having a hard time dealing with the "prohibitive" compliance burden. "The regulatory and compliance costs are affecting us all in terms of the business that we can and can't do," said one. "The low-hanging fruit aren't there any more."

STEP chief executive David Harvey concluded: "Our prediction for East Asia is that increasing regulatory initiatives – especially tax compliance – will make practitioners' lives more difficult."

The report was published in November 2011 by research firm Spence Johnson in conjunction with STEP. It examines the differences between East Asian international financial centres and more established IFCs, as well as providing fresh input into the long-running debate on Hong Kong versus Singapore as rival centres of private client wealth management. It also illuminates the impact of China as a force for change.