Brazilian pension funds have started to slowly invest abroad, on
the one hand this is an extraordinary opportunity for
diversification of assets, well above what the internal market can
provide, on the other this is something that requires attention to
the legal obligations and regulations, especially those that relate
to taxes payable. Uncle Sam is watching and has even set a date:
December 31. Ignoring it will not be cheap: a withholding tax of
30% on income and principal, if not complaint , is enough to cause
damage to the fund's performance in which it is applied.
Is not refundable – "Although withholding tax may sound
like something refundable, is in fact a penalty, because there is
no refund procedure," explains
Francine Balbina, Executive Director of DMS Offshore
Investment Services, which provides consulting services on
governance for offshore investment funds. Francine notes amounts
withheld in cases of non-compliance are generally
Francine noted that the first step for the funds considered as
Foreign Financial Institution ("FFIS") is to complete
your registration with the IRS before the end of this year, next is
the fulfillment of other requirements to prove to be operating in
accordance with the tax obligations.
All investment funds, Francine continues, that have not
registered yet, need to be registered with the IRS (Department of
Revenue) as soon as possible if they wish to receive a Global
Intermediary Identification Number (GIIN) in time to be included in
the list for early 2015.
Brazilian pension funds and cautious investors should certify
that the managers of international funds in which they invest are
actually meeting the requirements of US tax authorities and other
countries, such as the UK.
FATCA, whose full name is Foreign Account Tax Compliance Act in
Portuguese free Tax Compliance Act accounts abroad, was approved by
the US Congress in 2010, explains François Racicot broadly
to allow the US Revenue Service to apply tax laws to people who
might somehow be using investments and foreign accounts to hide
their income and assets abroad. Investors classified in this
situation would be evading thus of its obligations regarding the
declaration and payment of taxes due in the US.
According to analysis by Mercer, FATCA has the potential to
impose a withholding tax on the financial institutions that receive
revenues in the US or even proceeds of assets based there.
Therefore, this legislation impacts all financial institutions that
invest in US-based assets, regardless of the participation of US
citizens, which includes the Brazilian complementary pension funds
and that at the time they begin to invest abroad. Because of this,
François notes, "this seems like a good time for our
leaders the ensure that they are satisfied that the financial
institutions that are being considered in the selection process are
well prepared to meet the requirements of FATCA."
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Maltese tax law provides for rules which grant beneficiaries referred to as ‘Highly Qualified Persons' to be taxed at a reduced rate of tax of 15% on their employment income, provided certain conditions are satisfied.
Non-U.S. individuals making direct investments in the United States face a bewildering U.S. tax regime.
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