Optimizing and managing withholding tax for global public equities investment portfolios is complex and time-consuming. It requires commitment and cooperation between investors, investment managers, custodians, and tax advisors. A well-structured process can help ensure timely collection of data and efficient tax reclaims, while minimizing unnecessary communication and resource strain among stakeholders.

Based on years of practical experience, here are three core aspects that are essential to achieving an efficient and effective withholding tax recovery infrastructure:

1. Preparation

Clear processes must be in place to collect the necessary claim documentation. Roles and responsibilities of all involved parties - such as pre-completing, preparing, requesting, and reviewing documents - should be clearly defined.

2. Operation

A solid service infrastructure requires both staffing and technology to efficiently process and monitor requests for information and documentation. This infrastructure should support converting data into complete and admissible tax reclaims.

3. Termination

Clear rules should define when to stop processes if they stall or fail due to non-compliance from any of the involved actors. This helps prevent wasted efforts and resource inefficiency.

Why Process Definition Matters

Withholding tax reclaims involve a large number of stakeholders and varying jurisdictional requirements. Without a defined process, the risk of delays and miscommunication increases. Clear structures help reduce the “noise” and ensure smoother operations.

Information and Documentation: The Foundation of Reclaim Success

For the preparation and filing of withholding tax claims, a significant volume of documentation is necessary. This includes documents that establish claim eligibility and/or demonstrate the validity and accuracy of claim amounts.

Documentation stakeholders

Each jurisdiction has its own rules, ranging from official forms to informal practices. Stakeholders who may need to provide documents include:

• Investors

• Custodians

• Tax offices

• Fund managers

• Local tax agents and guarantors

• Supervisory bodies

• Auditors and actuaries.

Types of documentation

Some documents are publicly available (e.g., annual accounts), while others must be requested and may incur fees (e.g., tax vouchers, certificates of residency). Additional handling may include:

• Legalisation

• Apostilling

• Translation

• Certification

Documentation procedures

There are a few requirements that need to be kept in mind during the documentation process:

• Processes must be understood by key actors;

• Roles and responsibilities must be clarified;

• Costs must be aligned with potential benefits.

In conclusion

Building an effective withholding tax recovery process hinges on clarity, infrastructure, and compliance. By defining roles, preparing the proper documentation, and using a structured approach to manage operations and termination, stakeholders can increase the efficiency of global tax reclaim processes.