Hi Michael, sometimes your stock broker can apply the tax treaty to your dividend payouts and you don't have to approach the tax authority of the company's domiciled country yourself. For example, Interactive Brokers LLC reduced my dividend withholding taxes for payments from US, Canadian and Australian companies according to the relevant tax treaties. Unfortunately, they don't do this yet for any Asian stocks afaik.
Just as a personal observation, it seems that many tax authorities purposely demand excessive amounts of paperwork in order to discourage claims. For example, Indonesia wants part of the DGT-3 filled in and stamped by your local tax authorities. At your overburdened and understaffed local tax office, it will be hard to find someone who is willing to study a foreign form and put an official stamp on it. There are reclaim service providers who have the right contacts and experience to handle these forms for you, but their fees might be higher than the amount you can reclaim.
I (US citizen) have owned INFY and UL for probably 2+ decades and the foreign taxes are calculated on every statement where there is a dividend from them but I have honestly never looked at it too closely to figure out what my dividend yield ultimately is... Also, on our end of the year tax forms, there are "Foreign Tax Paid" lines and we do have the special tax forms for expats/foreign income etc (which I have to fill out living abroad) BUT that foreign tax is not worth the trouble of including + most retail investors would be buying stock in tax deferred accounts (401ks, IRAs etc)... I am not subject (for now...) for local taxes in Malaysia...
Hi Michael, sometimes your stock broker can apply the tax treaty to your dividend payouts and you don't have to approach the tax authority of the company's domiciled country yourself. For example, Interactive Brokers LLC reduced my dividend withholding taxes for payments from US, Canadian and Australian companies according to the relevant tax treaties. Unfortunately, they don't do this yet for any Asian stocks afaik.
Just as a personal observation, it seems that many tax authorities purposely demand excessive amounts of paperwork in order to discourage claims. For example, Indonesia wants part of the DGT-3 filled in and stamped by your local tax authorities. At your overburdened and understaffed local tax office, it will be hard to find someone who is willing to study a foreign form and put an official stamp on it. There are reclaim service providers who have the right contacts and experience to handle these forms for you, but their fees might be higher than the amount you can reclaim.
Good to know, thanks Jake. Makes sense that tax authorities would do this.
I have been investing in "H" China shares in HKSE and I noticed that the WHT is 10%, not 20% as you mentioned
Are you in a country with a double tax treaty with Hong Kong? It's 10% for Singaporeans for example but 20% in many other countries
Sorry, I meant China, not Hong Kong
I invest a lot internationally and I live in Spain.
At the end of the year, I must give my dividend income and capital gains to the tax authorities.
Then there is a field for "transaction costs" and "foreign witholding tax paid".
I just give this to the accountant, and my understanding is that it's a straight deduction on my income.
Maybe it is not fully efficient, and I could claim more, but I am more focused on investing than penny pinching.
One or twice the tax office came back and asked for proof, to which I sent the broker annual report.
Sounds very straightforward. Thanks for sharing
This is useful and I included it with my Monday links post: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-february-3-2025
I (US citizen) have owned INFY and UL for probably 2+ decades and the foreign taxes are calculated on every statement where there is a dividend from them but I have honestly never looked at it too closely to figure out what my dividend yield ultimately is... Also, on our end of the year tax forms, there are "Foreign Tax Paid" lines and we do have the special tax forms for expats/foreign income etc (which I have to fill out living abroad) BUT that foreign tax is not worth the trouble of including + most retail investors would be buying stock in tax deferred accounts (401ks, IRAs etc)... I am not subject (for now...) for local taxes in Malaysia...