Global investors who receive dividend and interest income paid on cross-border investments are subject to a non-resident withholding tax imposed by the foreign government tax authority where the security was issued. This non-resident withholding tax may be as high as 25%-35% of the dividend and interest income. Industry analysis indicates there is approximately $200 billion of withholding tax deducted globally every year, of which 25% is left unclaimed by their beneficial owners.

Investors with cross-border investment income are often entitled to withhold tax refunds depending on tax residency, legal status, and the existence of double-taxation treaties. Often this withholding tax on foreign dividends is assessed by the local tax authorities where the issuer is domiciled and can be reduced by reclaiming it from the relevant tax authorities. However, many investors do not have the knowledge or infrastructure to file for reclaims on their own. As a result, financial institutions are leaving taxes unclaimed, which is rightly due to their investors.

The process of filing a tax reclaim is often arduous and lengthy. The claim must be filed with local tax authorities after the time of payment, meaning the investor would have suffered the maximum withholding tax. Operationalizing the tax reclaim process can have the following challenges:

• No standardization across markets and lack of local subject-matter expertise

• Fragmented internal processes

• Changes needing to be monitored and if identified, systems needing to be updated

• High financial risk associated with getting this wrong

• Reclaims can take a long time to process

Global Tax Reclaims Service for financial service providers.

We are excited to announce our partnership with Globe Tax, the industry leader in withholding tax reclaims, allowing us to offer customers access to a market-leading service for efficiently and cost-effectively reclaiming withholding tax on cross-border dividend income. With this combined offering, no matter which jurisdictions or regulatory obligations your business encounters, S&P Global Market Intelligence offers proven, interoperable solutions that enable you to streamline tax compliance processes and scale operations from end to end—all within a single ecosystem and platform.

The Global Tax Reclaims Service enables any service provider, including financial intermediaries, brokers, custodians, investment managers, hedge funds, corporations, and pension funds, to extend tax reclaim services to their clients without assuming the operational burden. A team of leading tax experts and local tax specialists manage the process of reclaiming funds on behalf of the beneficial owners from start to finish while providing a single dashboard to track the lifecycle and status of the reclaim.

• Consolidate reclaims across multiple tax regimes
• Gain access to a global network of local tax specialists
• Tap into the tax subject-matter expertise and local tax experts
• Enhance your brand with a fully white-labeled managed service
• Monitor progress on tax reclaims within a single dashboard

Global Relief at Source Service for Global Investors

For global investors, tax relief at source is the preferred method of reducing tax rates at the time of income payment. However, not all foreign governments have provisions for relief at source, and strict requirements may disqualify some investors. Managing tax withholding rates for global clients and portfolios has become increasingly complex. The manual process has proven inefficient, especially with over 3,000 active tax treaties worldwide.

To address this challenge, S&P Global Market Intelligence has developed Global Tax Relief at Source, an automated workflow, and a configurable, rules-based tax compliance engine to identify, validate, confirm, and apply optimal withholding rates across 200+ jurisdictions globally.

The Global Relief at SourceService is seamlessly integrated into our comprehensive ecosystem of tax solutions. Whether your business encounters various jurisdictions or regulatory obligations, S&P Global Market Intelligence offers proven, integrated solutions that streamline the tax compliance process. With a user-friendly dashboard, your team can easily monitor the health of your tax due diligence processes across multiple jurisdictions at a glance. Track, assign, escalate, and remediate due diligence tasks with ease. The dashboard also provides key performance indicators, including expiration campaigns, invalid form remediation, and missing documentation, giving you insights into your workflow.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.