Investors miss out on £11bn of unclaimed tax
April 26 2011, 9:00 am26 April 2011 by Simon Danaher
Investors are likely to miss out on nearly £11bn from their cross-border shares and bonds from last year because withholding tax on dividends and income is not being properly reclaimed, according to a recent report.
The study, conducted by tax reclamation specialist Goal Group, found that US investors are likely to chalk up the highest losses, with around $3.164bn left un-reclaimed by investors, while UK investors are set to lose out on £1.65bn. The total figure represents nearly a quarter of all reclaimable tax on cross-border securities.
Goal said, as cross-border shareholdings have become more popular, lost returns through un-reclaimed tax have also escalated and are significantly higher than in 2005, when the company last examined the issue.
It added that, according to statistics from the International Monetary Fund and from global stock exchanges, the market capitalisation of global equities rose 79% between 2001 and 2009, whereas the value of cross-border equities investments rose 163% over the same period. Cross-border shareholdings have therefore risen at around double the market rate.
Furthermore, Goal said last year also saw a resurgence in equity dividend payments as markets grew and that this trend is likely to continue in 2011 amid enhanced corporate confidence and economic recovery. In parallel, the value of bonds listed on global markets has escalated across the decade. In light of the increasing popularity of dividend payments and cross-border securities, Goal said un-reclaimed tax will continue to rise unless reclamation levels improve.
Stephen Everard, chief executive officer, Goal Group, said: “Savvy investors are increasingly adopting a global investment strategy to maximise their earnings from securities – both equities and bonds – a substantial proportion of their rightful returns will risk languishing in foreign tax regimes if the reclamation of withholding tax is not treated with the due attention it deserves.”
To read this article on the International Adviser website Click Here
