1Q17 Withholding Rate Changes
So far, seven countries have issued statutory withholding rate changes for dividend payments in 2017. Changes like these – along with increased audits, documentation requirements, and scrutiny from regulators – illustrate the potentially growing complexity cross-border investors might face.
Why are these changes important?
High (statutory) withholding rates are often applied to investment income by a foreign government’s tax authority, due to their lack of information about the ultimate beneficial owner of the relevant investments. As a result, billions of dollars are over-withheld every year. Failure to file the appropriate tax forms within the Statutes of Limitations results in the loss of these entitlements. Investors may be able to recover some, if not all withholdings, if they are resident in countries with Double Taxation Treaties.
With a few exceptions, governments seeking to grow their programs and boost income are increasing their statutory withholding rates. These changes can occur at unexpected intervals and without notice. Investors who want to stay abreast of rate changes can do so by signing up for access to GlobeTax’s eTaxData portal. eTaxData covers over 245 markets and is used by financial institutions and investors for tax planning, research and management of dividend withholdings.