Authorities in China are going after investors' profits on US and Hong Kong assets, reports said.

China is reportedly enforcing its longstanding tax rules on overseas investments, putting global retail investors under pressure.

Tax authorities in China have started to contact individuals who trade Hong Kong and US stocks, instructing them to declare their income and settle tax liabilities (Bloomberg, 24 July Caixin Global, 22 July).

A 20 per cent levy is applied to dividend income as well as annual net stock trading profits.

Bloomberg noted that tax residents, usually defined as people who spend at least 183 days a year in the mainland, have been required to pay taxes on their global income for decades. However, until recently, there has hardly been any enforcement.

Commentators have noted that now is a good time to make the move, given the buoyant nature of the US equity market, for example. 

As noted, mainland Chinese who purchase Hong Kong-listed shares through the Stock Connect program are exempted from capital gains taxes, at least until 2027.

Earlier in July, China Daily reported that "Chinese mainland residents investing in Hong Kong and US stocks have received notices from local tax authorities, urging them to review their domestic and overseas income and tax filing declarations."