From the desk of Ross McGill, Chairman, TConsult
Claiming the due entitlement to lower rates of income withholding tax under double taxation treaties and the legislation of some issuer countries is fraught with difficulty. Complex networks of intermediaries leads to entitlements being overlooked. Where entitlements are identified, but relief at source is not available, investors face unwieldy paper-based processes where delays and losses can arise, such as for institutions filing only annually and where claims get lost in the chain of intermediaries.
If your institution is exposed in this way, then this December 31 is a key date for you. The end of the calendar year is the most common day in the year when the right to file for some past entitlements is usually lost, although the timing and length of this 'statute of limitation' does vary by issuer country. This deadline can cost firms dear, as it operates to deny a claim that is valid in every other respect.
This is not all bad news. The statute does at least present a window of opportunity to review for overlooked claims and file in time. In circumstances where over-withheld tax has not been reclaimed before – whether for certain instruments, in a particular market or across the board – there is the prospect of a 'windfall' by recognising entitlements falling within the statute and then filing claims in time.
The statute also brings into focus the need to examine processing models for securities tax. Institutions should gain assurances that these do not serve to create or permit backlogs, thereby constituting 'statute risk'. Moreover, asset owners and managers can reasonably expect the operating models applied by their service partners to be at the forefront in providing a securities tax service fit for the 21st century. They can now examine performance of their service partners against market-wide service benchmarks at ServiceMatrix.
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From the desk of Ross McGill, Chairman, TConsult
Claiming the due entitlement to lower rates of income withholding tax under double taxation treaties and the legislation of some issuer countries is fraught with difficulty. Complex networks of intermediaries leads to entitlements being overlooked. Where entitlements are identified, but relief at source is not available, investors face unwieldy paper-based processes where delays and losses can arise, such as for institutions filing only annually and where claims get lost in the chain of intermediaries.
If your institution is exposed in this way, then this December 31 is a key date for you. The end of the calendar year is the most common day in the year when the right to file for some past entitlements is usually lost, although the timing and length of this 'statute of limitation' does vary by issuer country. This deadline can cost firms dear, as it operates to deny a claim that is valid in every other respect.
This is not all bad news. The statute does at least present a window of opportunity to review for overlooked claims and file in time. In circumstances where over-withheld tax has not been reclaimed before – whether for certain instruments, in a particular market or across the board – there is the prospect of a 'windfall' by recognising entitlements falling within the statute and then filing claims in time.
The statute also brings into focus the need to examine processing models for securities tax. Institutions should gain assurances that these do not serve to create or permit backlogs, thereby constituting 'statute risk'. Moreover, asset owners and managers can reasonably expect the operating models applied by their service partners to be at the forefront in providing a securities tax service fit for the 21st century. They can now examine performance of their service partners against market-wide service benchmarks at ServiceMatrix.
