Global Asset Compliance Planning
Understanding CRS 2.0 · CARF · CFC Rules · Decree 837
From 2026, CRS 2.0, CARF, CFC rules and Decree 837 together form the world's tightest cross-border asset regulatory network. We help clients achieve both asset protection and identity optimisation within a compliant framework — beyond identity, planning the future.
1. The Four Regulatory Tools Explained
CRS 2.0
Details +The 'ultimate patch' for global tax transparency
- Full asset coverage: crypto assets and CBDCs now reportable
- Full identity reporting: no more 'elective reporting' — all tax residences must be declared
- Full transparency: beneficial owner roles reported; burden of proof shifts to institutions
Effective 1 Jan 2026; Hong Kong fully applies CRS 2.0 in 2028, first exchange 2029. In May 2026, Hong Kong saw its first CRS criminal conviction — 6 months' imprisonment and a HK$500,000 fine for false information.
CARF
Details +The 'transparency' framework for crypto assets
- Covers cryptocurrencies, stablecoins, crypto derivatives and indirect exposure
- Reporting by exchanges, brokers, dealers and crypto ATM operators
- 76 jurisdictions committed; Hong Kong plans first exchange in 2028
Runs independently of CRS 2.0 as OECD's parallel reporting framework for crypto assets.
CFC Rules
Details +'Deemed distribution' of offshore profits
- Triggered when an offshore entity is in a jurisdiction below 12.5% tax
- Retained profits deemed distributed and taxed currently
- Exemptions: 12 non-low-tax countries, annual profit under RMB 5M, active business income
In 2026, mainland China's CFC audits have targeted 7,000 enterprises.
Decree 837
Details +'Full oversight' of individual offshore investment
- Effective 1 July 2026, first to include mainland resident individuals
- Look-through review of personal accounts, SPVs, trusts, foundations, insurance, property
- Multi-dimensional oversight: FX, tax, KYC, CRS, AML, national security
Residents holding offshore companies, trusts or large offshore accounts face double penalties for concealment.
2. The Synergy of the Four-Tier Regulatory System
Four tools cross-verify and compare across dimensions, forming a closed loop of 'detection — determination — recovery'.
| Tool | Dimension | Information Flow |
|---|---|---|
| CRS 2.0 | Financial account info | Offshore institutions → local tax authority → China tax authority |
| CARF | Crypto transactions | Crypto platforms → local tax authority → China tax authority |
| CFC Rules | Offshore profits | Tax authority launches audits based on CRS data |
| Decree 837 | Individual offshore investment | FX records, bank flows, CRS data, travel records compared |
3. How Flourish Delivers Real Value
Our core value: moving from 'selling identity' to 'selling planning' and 'peace of mind' — achieving both asset protection and identity optimisation within compliance.
Precise tax residency positioning
- Accurately determine tax residency (household, days of residence, family and economic ties)
- Use a Turkish passport to shift the CRS exchange endpoint away from China
- Build a 'Turkey + Hong Kong/Singapore' identity structure for compliant tax optimisation
Compliant restructuring of offshore structures
- Review BVI/Cayman companies and family trusts for compliance risk
- Adjust structures to ensure accurate beneficial owner reporting
- Establish commercial substance documentation for economic substance rules
Compliant holding of crypto assets
- Assess exposure risk on centralised exchanges
- Advise on compliant holding and reporting of self-custody wallets
- Prepare ahead of the 2027–2029 first CARF exchanges
Proactive compliance reporting of offshore assets
- Systematically map offshore accounts, crypto and structures
- Complete remediation before the 2027 first CRS 2.0 exchange
- Connect you with cross-border tax lawyers, trustees and accountants
4. Recommended Actions
- 1Start asset mapping now: list all offshore accounts, crypto holdings and trust/SPV structures
- 2Confirm tax residency: consult a tax lawyer to determine your and your family's status
- 3Assess compliance risk before the 2027 first exchange
- 4Proactively report legacy issues within the window period
- 5Restructure offshore structures and asset holding per the new rules
5. Summary
In 2026, CRS 2.0, CARF, CFC rules and Decree 837 together form the world's tightest cross-border asset regulatory network — information is visible, identity traceable, profits recoverable and investment manageable. For Flourish, this is the greatest opportunity: helping clients protect assets and optimise identity within compliance, making 'beyond identity, planning the future' measurable, actionable and verifiable.
Start Your Tax Residency Assessment & Offshore Asset Health Check
Complete your compliance preparation before the 2027 first exchange.
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