Tuesday, 13 August 2019

More on Withholding Tax

Investmentmoats published an article about Withholding tax, here is some extra info not covered by the article.

For Singapore investors, I'm sharing some withholding tax knowledge that I have acquired (I'm not sharing my actual experience, and I cannot speak for investors from other countries):

(1) There is a difference between Shell-A and Shell-B, both listed on LSE and available as ADR. Singapore investors buying Shell-B pay ZERO withholding. Similarly, there is more than 1 BHP counter, and one of them has ZERO withholding, the other you pay the ozzie withholding. 

 (2) Australia withholding has the complicated franking credits. If you are an individual stock investor, you are unlikely to get the benefits of these credits, but somehow the ASX listed ETFs are able to do some tax magic and use these credits, so your effective dividend withholding becomes less than 15% when you invest via ETF. 

 (3) Spanish shares – zero withholding for scrip dividend (always choose scrip dividend where available). (4) technically, US listed bond ETFs purchased by foreigners should also be liable for zero withholding on ‘dividends as these ‘dividends’ are actually interest payments’, but you have to do the tax reclaim yourself because the ETF doesn’t declare it as qualified income for you. But I’ve never seen anyone successfully do this individually. Another blogger posted something recently about stashaway doing a tax reclaim on US-listed bond ETF withholding tax and refunding it to the blogger. 

 (4) Irish domiciled US corporate Bond ETFs pay ZERO withholding tax (see their annual report) 

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