Guide to Treatment of Withholding Tax Rates
Contents 1. Introduction 1 1.1. Aims of the Guide 1 1.2. Withholding Tax Definition 1 1.3. Double Taxation Treaties 1 1.4. Information Sources 1 1.5. Guide Upkeep 1 2. Withholding Tax Rates 2 3. Withholding Tax Rates including Double Taxation Treaties 5 3.1. Introduction 5 3.2. United States 5 3.3. United Kingdom 6 4. Updates 7 4.1. Recent updates 7 4.2. Update History 7 Disclaimer 8
1. Introduction 1.1 Aims of the Guide This document outlines the treatment of withholding tax rates on dividends by Euromoney Indices (EI) in the calculation of Net Total Return Indices. 1.2 Withholding Tax Definition Withholding tax is expressed as the percentage amount that is deductible from gross dividends paid by companies to shareholders. Withholding tax can be deducted from dividends payable to nonresident corporations and individuals of the country of domicile where the dividends are being paid from. The rate of withholding tax varies depending on both the country of domicile of the company and the country of domicile of the shareholder. 1.3 Double Taxation Treaties The double taxation on dividends can be avoided where two countries have agreed and ratified a Double Taxation Treaty with regard to their withholding taxes. The default treatment in the calculation of a Net Total Return Index is to ignore any Double Taxation Treaties and these are the rates provided in the Table in section 2. EI also maintain withholding tax rates which account for Double Taxation Treaties and, in section 3, the Rates are provided based on the country of domicile of a shareholder being from the United States and from the United Kingdom. 1.4 Information Sources The withholding tax rates are maintained with reference to published rates from publicly available information sources such as accounting firms and government publications. These sources are all monitored carefully when considering the withholding tax rates EI applies. 1.5 Guide Upkeep EI reviews the withholding tax rates on a monthly basis. Any amendments are documented in section 4, the Updates section, outlining the most recent update along with a revision history of any previous amendments made. V6-310118 1
2. Withholding Tax Rates The following table represents the maximum withholding tax rate a company will withhold from dividends paid to non-resident shareholders. Any Double Taxation Treaty that may be in place between two countries is not included in this table. Country % Rate Notes Argentina 0 Australia 30 Austria 27.5 Bahrain 0 Bangladesh 20 Belgium 30 Bermuda 0 Bosnia 5 Botswana 7.5 Brazil 0 Bulgaria 5 Canada 25 Chile 35 China 10 Colombia 5 Croatia 12 Cyprus 0 Czech Republic 35 Denmark 27 Egypt 10 Estonia 0 Finland 30 France 30 Dividends are often paid out in the form of interest and a withholding tax rate of 15% is applied. Companies incorporated offshore, and listed on the Hong Kong Stock Exchange, and exchanges in the US have a withholding tax rate of zero unless a 10% withholding tax rate is announced by the companies. Dividends paid to non-residents are subject to 5% WHT rate if the dividends are paid out of profits that were taxed at the corporate level. Otherwise a rate of 40% applies. Germany 26.375 A 5.5 % solidarity surcharge applies to the 25% withholding tax rate. Ghana 8 Greece 15 Hong Kong 0 Hungary 0 Iceland 0 Officially, the withholding tax rate to any non-resident entity is 18%, though non-resident companies or individuals in the EEA may be reimbursed the next year following an application sent to the Icelandic tax authorities. V6-310118 2
Country % Rate Notes India 0 Indonesia 20 Ireland 20 Israel 25 Italy 26 Jamaica 33.33 Japan 15.315 Included in this rate is a 2.1% income surtax. Jordan 0 Kazakhstan 15 Kenya 10 Korea 22 A 10 % surtax applies to the 20% withholding tax rate. Kuwait 0 Latvia 0 Lebanon 10 Lithuania 15 Luxembourg 15 Malaysia 0 Malta 0 Mauritius 0 Mexico 10 Morocco 15 Netherlands 15 New Zealand 30 Nigeria 10 Norway 25 Oman 10 Pakistan 12.5 Palestine 10 10% withheld on dividends but 0% withheld when paid out as interest. Peru 5 Philippines 30 Poland 19 Portugal 25 Qatar 0 Romania 5 Russia 15 Saudi Arabia 5 Serbia 20 Singapore 0 Slovakia 0 Slovenia 15 V6-310118 3
Country % Rate Notes South Africa 20 Spain 19 Sri Lanka 14 Sweden 30 Switzerland 35 Taiwan 20 Thailand 10 Trinidad & Tobago 10 Tunisia 5 Turkey 15 Ukraine 15 UAE 0 UK 0 Net dividend rates (gross dividend less 10% tax credit) are applied. USA 30 Venezuela 0 Vietnam 0 Zimbabwe 10 This is provided that the dividend distributions do not exceed the paying company s net taxable income. In other cases, withholding tax would be at a rate of 34%. A 10% rate applies to dividends paid by companies listed on the Zimbabwe Stock Exchange to resident individuals and non-residents. A 15% rate applies to all other dividends paid to resident individuals and non-residents. V6-310118 4
3. Withholding Tax Rates including Double Taxation Treaties 3.1 Introduction Upon request, EI can provide tailored Net Total Return Index Calculation using withholding tax rates relevant to shareholders from a given country of domicile. From the standpoint of a shareholder based in the United States or the United Kingdom, the following two tables are examples, as at 10 July 2015, of what shareholders from the respective countries would expect to pay in withholding tax on dividends based on the Double Taxation Treaty their country of domicile has with the company s country of registration. 3.2. United States The following table represents the agreed tax rate a company will withhold from dividends paid to shareholders domiciled in the United States. Where two countries do not have a Double Taxation Treaty, the rates in section 2 would apply. Country % Rate Country % Rate Australia 15 Lithuania 15 Austria 15 Luxembourg 15 Belgium 15 Malta 0 Bulgaria 10 Mexico 10 Canada 15 Netherlands 15 China 10 New Zealand 15 Cyprus 0 Norway 15 Czech Republic 15 Philippines 25 Denmark 15 Poland 15 Egypt 20 Portugal 15 Estonia 0 Romania 10 Finland 15 Russia 10 France 15 Slovakia 0 Germany 15 Slovenia 15 Greece 0 South Africa 15 Iceland 15 Spain 15 India 25 Sweden 15 Indonesia 15 Switzerland 15 Ireland 15 Thailand 10 Israel 25 Turkey 20 Italy 15 Ukraine 15 Japan 10 United Kingdom 0 Korea 15 Venezuela 15 V6-310118 5
3.3. United Kingdom The following table represents the agreed tax rate a company will withhold from dividends paid to shareholders domiciled in the United Kingdom. Where two countries do not have a Double Taxation Treaty, the rates in section 2 would apply. Country % Rate Country % Rate Argentina 15 Malaysia 0 Australia 15 Malta 0 Austria 15 Mauritius 15 Belgium 10 Mexico 0 Bulgaria 10 Netherlands 10 Canada 15 New Zealand 15 Chile 15 Norway 15 China 10 Oman 0 Croatia 15 Panama 15 Cyprus 0 Philippines 25 Czech Republic 15 Poland 10 Denmark 15 Portugal 15 Egypt 20 Romania 15 Estonia 0 Russia 10 Finland 0 Saudi Arabia 5 France 15 Singapore 0 Germany 15 Slovakia 0 Greece 0 Slovenia 15 Hong Kong 0 South Africa 10 Iceland 15 Spain 10 India 10 Sweden 5 Indonesia 15 Switzerland 15 Ireland 15 Taiwan 10 Israel 15 Thailand 10 Italy 15 Turkey 20 Japan 10 Ukraine 10 Korea 15 United States 15 Kuwait 15 Venezuela 10 Lithuania 15 Vietnam 0 Luxembourg 15 V6-310118 6
4. Updates 4.1 Recent Updates Country New % Rate Previous % Rate Date Changed Oman 10 0 01 April 2017 South Africa 20 15 01 April 2017 Sri Lanka 14 10 01 April 2017 4.2 Update History Country New % Rate Previous % Rate Date Changed Belgium 30 27 02 January 2017 Columbia 5 0 02 January 2017 Greece 15 10 02 January 2017 Peru 5 6.8 02 January 2017 Argentina 0 10 15 August 2016 Pakistan 12.5 10 01 July 2016 Austria 27.5 25 01 January 2016 Belgium 27 25 01 January 2016 Kuwait 0 15 01 January 2016 Romania 5 16 01 January 2016 Spain 19 19.5 01 January 2016 V6-310118 7
Disclaimer Euromoney Indices, Euromoney Trading Ltd. and its affiliates or employees, or any third-party data provider, shall not have any liability for any loss sustained by anyone who has relied on the information contained in this document. The data and analysis contained herein are provided as is. Euromoney Indices disclaims any and all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. None of the information or any EMIX Index or related products and services constitutes an offer to buy or sell, or promotion or recommendation of, any security, financial instrument of product or trading strategy. Further none of the information or EMIX Index or related products and services is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Further distribution prohibited without prior written permission. Copyright 2013 (c) Euromoney Indices. All rights reserved. Euromoney Indices, a business that is part of Euromoney Trading Limited, a company incorporated in England and Wales with company number 05935420, having its registered office at 8 Bouverie Street, London EC4Y 8AX. V6-310118 8