Notice of United States Publicly Traded Partnership (PTP) New Withholding Regulations
Notice of United States Publicly Traded Partnership (PTP) New Withholding Regulations
The 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.
If you are holding a PTP, please be reminded to review your portfolio and also consider the impact of the new withholding regulations if you sell the PTP on or after 1 January 2023.
In view of the impact of the new withholding regulations, uSmart Securities Limited (“uSmart”) will implement the following arrangements:
- From 12 December 2022, PTPs in your account will not be treated as collateral, margin financing services of the PTPs will be suspended;(PTP affected stock list);
- From 19 December 2022, PTPs will not be able to purchase;
- PTPs will not be allowed to sell after 28 December 2022, if you are holding a PTP, please be reminded to sell or transfer out on or before 28 December; and
- PTPs will be removed from the list of “Monthly Investment Plan” automatically.
Due to the fact that the IRS has not provided an official list of PTPs, uSmart will provide and update a list of PTPs from time to time based on the market information from uSmart’s upstream partners. uSmart cannot guarantee the completeness and accuracy of the list which is for clients’ reference only. Please be reminded to pay attention to the relevant risk.
The above information is for reference only as the content of the IRS official documents shall prevail. The above information is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. If you are in any doubt, you should consult your professional legal, financial or other professional advisers. Reference from IRS website.
For details, please refer to IRS website:
https://www.irs.gov/individuals/international-taxpayers/partnership-withholding
If you have any question, please contact our Customer Service Department at (852) 3018 4526.
