Recently, some individuals who have invested in overseas markets have received notifications from tax authorities, requesting them to pay the corresponding taxes on their overseas earnings. This situation has caused a lot of confusion and reflection among investors.

Imagine that you have been working hard in the international market, and after much effort, you have earned 100,000 yuan, only to be suddenly told that you need to pay 20,000 yuan in taxes. This can indeed be frustrating. What is even harder to accept is that even if you suffered huge losses last year, as long as you have profits this year, you may need to pay taxes on those earnings.

So, how do tax authorities become aware of overseas account information? The answer lies in the CRS (Common Reporting Standard) system. This is a financial account information exchange network that covers more than 100 countries and regions worldwide. Many countries, including Hong Kong, Singapore, Australia, and Canada, participate in it. Currently, the two most frequently queried are two major Chinese brokerages with large user bases.

In financial institutions in CRS member countries such as Hong Kong, if the assets of your individual financial account (including securities firms and banks) exceed 1 million USD at any time during the year, it will be flagged, and the relevant information will automatically enter the exchange process.

The timeline for information transmission is generally as follows: by June 30 each year, financial institutions report data to local tax authorities. By September 30, this information is organized and sent to the State Administration of Taxation in mainland China. By June 30 of the following year, you might receive a 'tax supplement notice'.

The information being conveyed includes: basic personal information (such as name, address, tax number, etc.), the total balance or value of the account, and the total earnings of the account for the year. It is worth noting that only the totals are provided, without specific details; if proof of costs is needed, it may be necessary to provide account statements yourself.

Therefore, as long as your assets are within the CRS system and exceed the specified threshold, your overseas account information may be obtained by the relevant tax authorities. This phenomenon reflects the increased transparency of global financial information and poses new challenges for cross-border investors. Investors need to plan their overseas asset allocation more carefully and stay informed about relevant tax policies in order to make informed financial decisions.