US Withholding Tax on Publicly Traded Partnerships (PTP) Securities

Internal Revenue Service (“IRS”) of the United States has promulgated PTP Withholding and Reporting Regulations. According to the new QI Agreement and Internal Revenue Code Section 1446(f), other than exceptions, if any portion of the gain or any disposition of an interest in a foreign partnership is effectively connected with the conduct of a US trade or business, Qualified Intermediary transferring the interest must withhold a 10% tax on the disposition. Also, if the foreign partner receives a distribution from a PTP, a 10% tax of such distribution will have to be withheld. The new PTP withholding regulations will become effective from 1 January 2023.

●  Sales or transfers of PTP securities shall be subject to a withholding tax equal to 10% of the transaction amount;

●  Dividends/interest from PTP securities shall be subject to a withholding tax equal to 37% (applicable to individual investors) or 21% (applicable to companies or institutional investors) of the dividends.

In view of the impact of the new withholding regulations, uSMART SG may not be able to support PTP Securities trading, transfer-in request, or any other related transactions in PTP Securities.In the event if we can allow trading in PTP, there may be an additional withholding tax applied on gross amounts of distributed income or disposition of the aforesaid PTP to the customer as per IRC Section 1446.

Please click here for list of PTP for your reference. There are market circumstances such as entity conversions and other corporate actions that can change an entity's tax classification. uSMART are not liable to any loss or liabilities arising from the use of the information.

The information is for reference only as the content of the IRS official documents shall prevail. It is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. uSMART does not guarantee the completeness and accuracy of the list of PTPs. If you are in any doubt, you should consult your legal, financial, or other professional advisers.

For details, please refer to IRS website.