GlobeTax today announced important enhancements to its US Reclaim Service which enables support for Qualified and Non-Qualified Intermediaries (QIs/NQIs) under US withholding tax regulations.
A significant number of investors in US securities are taxed at the maximum - 30% withholding rate on dividend income and interest, even though they may be entitled to a lower rate based on existing bilateral tax treaties. These investors often do not receive the favourable tax rate due to documentation gaps, the way their accounts are structured, lack of valid and timely documentation to QIs or US Withholding Agents and the general level of knowledge of US tax regulations.
Martin S. Foont, President & CEO of GlobeTax said "Given the rate at which markets and regulations are evolving, financial institutions are struggling with the required investment in developing new responses. The result is that investors are often taxed at the 30% rate and then lose out on refunds to which they are entitled. GlobeTax's US tax recovery offering helps QIs and NQIs meet their regulatory responsibilities and service their client's needs at a fraction of the cost of doing it in-house." The US operates under a different model than most other jurisdictions when it comes to the way tax reclaims are submitted and processed. In the US, when filing to recover excess withholding tax, a full tax return must be filed. This complexity does not exist in most other markets where one can generally file for a reclaim on a single dividend.
Through its enhanced offering, a much wider range of investors can benefit from the tax recovery services that GlobeTax provides. Refund payments from the IRS are typically paid within six weeks from filing.