Firms must assess potential tax exposure and work on building practical solutions
By Cyrus Daftary, CEO of Markit
CTI Tax Solutions
The focus of the front office is all about executing trades and
generating return. Since when have traders had to focus on tax?
That task has always been bestowed on the back office but
things are about to change. Enter in 871(m).
The new regulation will
establish up to a 30% withholding tax on foreign investors on
dividend-equivalent payments under equity derivatives from
January 1st 2017. So why should traders care? They
will now have the responsibility of screening or assessing
their trading strategies to see if their investments are
subject to 871(m) withholding. Simple, right? That depends on
the contract of course.
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