Nearly US$90 billion (20%) of the US$525 billion paid in dividends across eight major markets is withheld annually by foreign tax authorities.1 Fortunately, investors may be able to recoup almost half of that amount (US$39 billion) and often rely on their financial institution to facilitate the recovery process.
As GlobeTax recently reported, relief at source is the most efficient way for financial institutions to recover client tax withholdings. However, regulatory complexity has rendered the relief and reclaim processes more difficult than ever. Seeking to reduce fraud and combat tax evasion, tax authorities have tightened filing deadlines while increasing disclosure requirements. For clients holding omnibus accounts, these burdensome new requirements can virtually eliminate the prospect of relief.
All hope is not lost, however. Through our pioneering EDS Assist® service, GlobeTax has helped financial institutions navigate the relief at source process for ADRs and Canadian shares held at DTCC for over a decade. We have evolved this service through changing markets, and as of August 1, 2017, upgraded EDS Assist® once more, rebranding the platform as MIDASTM (Managed Income Distributions At Source).
Designed for speed, volume and flexibility, MIDAS is the market’s first and only standardized, comprehensive solution for efficient relief at source processing. Through MIDAS, financial institutions can effectively eliminate the operational and financial risks associated with missed claim opportunities, thereby maximizing tax recovery for clients while lowering the cost of delivery.
The MIDAS platform improves existing EDS Assist® functions to streamline and simplify the relief at source process, adding capabilities including:
- ISO 20022 integration to enable automated DTCC Instructions;
- expedited processing times;
- additional beneficial owner information checks; and
- market rules management.
Existing EDS Assist® clients will be upgraded automatically and require no action. Financial institutions without a tax relief solution in place should consider MIDAS for best practice client service. As investor interest in international diversification continues to grow, the regulatory environment will only become more complex and abstruse. GlobeTax continues to monitor the landscape and is committed to expanding MIDAS to meet the everchanging needs of our client base and the marketplace at large.
Recovery Opportunities in 8 Major Markets
Total withholding represents amount withheld from non-resident investors into each market; maximum potential recovery illustrates how much of that is available for recovery by non-resident investors who undertake some recovery action (e.g. relief at source, where available)