Investors missing out on $24b from cross-border investments
Investors are missing out in billions of dollars in returns from foreign shares and bonds due to unclaimed global withholding tax, new research claims.
Investors are missing out in billions of dollars in returns from foreign shares and bonds due to unclaimed global withholding tax, new research claims.
Data compiled by international withholding tax and class action services specialist, Goal Group, revealed that $24.1 billion of investors' rightful returns from cross-border investments were lost in the last financial year, because withholding tax on dividends and income was not reclaimed.
The figure represented an increase of nearly 30 per cent - in dollar terms - in the annual amount lost since 2011, the research found, and almost 24 per cent of the overall recoverable withholding tax.
Goal Group Australia and New Zealand managing director, Andy Costi, said those working in the fund management sector needed to pay more attention to the potential losses investors are experiencing due to the failure to reclaim withholding tax.
"As the global economy continues to recover, investors are increasingly adopting an international investment strategy to maximise their earnings from securities," he said.
"In all events, these cross-border shares are subject to a tax on returns that is deducted at the source. Although a proportion of this is available to be recovered, a substantial amount is still being languished in foreign tax regimes as the reclamation of withholding tax is not treated with the due attention it deserves.
"All those in the fund management community should take the issue seriously and make every endeavour to enhance investors' returns.
"A number of leading custodians have already recognised the market opening and effectively utilised tax recovery services, both for their clients and as an interbank services opportunity.
"However with 24 per cent of recoverable withholding tax lying unclaimed in foreign tax systems every year, there is still a clear opportunity for custodians to increase the scope and efficiency of reclamation services."
Recommended for you
Self-reporting issues to ASIC could lead to a reduced charge for a fund manager but it may not exempt them from enforcement action altogether, according to ASIC chair Joe Longo.
AllianceBernstein has announced its chief investment officer and Australian equity manager Roy Maslen is to step down from the firm at the end of the year.
Pinnacle Investment Management has announced it plans to launch a new affiliate from a global equities team departing Royal London Asset Management.
Asset manager Nuveen is seeing opportunity in municipal bonds which are at their highest yields in over a decade.
