Fund managers losing billions
Fund managers are losing $6 billion every year because they are not reclaiming the withholding tax that they are entitled to, according to a new report. Investors and custody banks have been aware of the problem for years, but this is the first time that anyone has measured how much the fund managers are owed.
The scale of the problem is likely to surprise fund managers, who are already struggling to eke returns out of difficult market conditions. The fund managers themselves are not legally able to claim tax rebates directly ? it is the responsibility of custodian banks to approach the tax authorities and request the money.
But a combination of clumsy bureaucracy on the part of tax authorities and a lack of awareness on the part of fund managers has resulted in low rates of recovery.
The report that puts a figure on the scale of this problem was published in November by Goal, a software company that provides solutions to custodians for providing reclamation services.