Foreign Withholding Tax Reporting: Why Access, Transparency and Expertise are Key

Access to WHT Reclaim Reporting

As an investor, the importance of optimizing foreign withholding tax (WHT) recoveries cannot be overstated. Reducing tax drag has an appreciable effect on investment performance, even more so if the reclaimed funds are reinvested over an extended period. 

However, achieving such optimization is a rather complex task that requires sophisticated analytics and technical knowledge. The basis for an accurate analysis of an investor’s WHT position and its overall impact on investment yield is premised on access to data, data transparency and technical expertise.

As an asset manager or an investor, a plethora of reporting is readily available. However, whilst it is relatively easy to obtain data on withholding taxes, it’s not so simple to evaluate. For example, establishing the value of WHT incurred across foreign investments is straightforward, however, determining the investment jurisdictions in which reclaims are viable requires specialist knowledge of both the local and foreign tax laws, which is further complicated by frequent changes in tax laws

Furthermore, expertise is required in assessing the status of submitted claims. This includes assessing the probability of refund as well as forecasting an expected payment date. In addition, where claims are queried, a comprehensive response must be submitted to the tax office within the specified timeframe, to avoid the claim lapsing.

The above-mentioned issues are exacerbated further by the volume of income events, which often run into tens of thousands each year. In many cases, various data sources in different formats need to be consolidated, in order to have a complete view.

Using WHT Reclaim Data for Investment Decision Making

Paying agents and other parties involved in the asset custody chain are required to keep records relating to WHT and when WHT reclaim data is made available to asset managers in a usable format, it acts as an excellent tool for asset allocation and investment decisions. 

However, it is often difficult to translate reports into quantifiable financial impact given the specialized and complex nature of withholding taxes on investment income. Quite simply, if an asset manager is able to select investments that have a higher effective return of investment after WHT recoveries have successfully been achieved, better investment decisions can be made.

The Questions Investors Should Seek Answers to

Simply knowing the total value of WHT claims submitted per year, per jurisdiction, is often inadequate as this limited information does not enable investors to assess the success rate of achieving refunds.

Three simple questions should be asked by all investors, to identify whether WHT data analyses allow for informed investment decisions:

  1. Do I receive regular transparent WHT reporting which shows each income event and the WHT incurred on each of those events?
  2. Am I able to identify for which income events WHT claims have been submitted and are there income events for which no claims have been submitted?
  3. Am I able to assess the impact of the reclaim potential on investment performance?

If you have answered “no” to any of the questions above then it is likely that the effectiveness of the current WHT recovery processes cannot be assessed, which may result in sub-optimal investment performance. 

Why You Should Seek Specialist Advice

Seeking the advice of a specialist in the above-mentioned circumstances is highly recommended. As a provider of wholly outsourced WHT recovery solutions, data acquisition and verification of accuracy are the cornerstones of WTax’s WHT recovery solution. 

Furthermore, WTax provides its clients with access to its state-of-the-art online reporting portal which allows clients to access such data, in the finest level of detail, in near real-time. Clients are able to filter these data across more than ten different categories for ease of use, along with built-in tax reporting and accompanying graphical representations. 

WTax has set a new industry standard for WHT reporting which provides access, accuracy and transparency.

Contact your local office or visit our website for more information.

Get in touch

This field is for validation purposes and should be left unchanged.