US dividend tax breaches international treaties, say lawyers

Section 871(m) rules “full of holes”, say dealers

Foreign holders of equity products are at an unfair disadvantage, say lawyers

New US tax rules on dividend-equivalent payments made to overseas investors may be in breach of bilateral income tax treaties between the US and other nations, lawyers and dealers have argued.

Final and proposed regulations under section 871(m) of the US Internal Revenue Code were published by the Treasury department and Internal Revenue Service (IRS) in September last year, detailing when and how dealers must withhold tax on US equity-linked instruments (ELIs) held by non-US persons.


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