Organisation for Economic Co-Operation and Development
CTPA Roundtable on Selected Tax Issues Related to
Collective Investment Vehicles
1-2 February 2006
Patricia McClanahan
Securities Industry Association
The Securities Industry Association (SIA)[1] would welcome a examination by the OECD's Committee on Fiscal Affairs and its Centre for Tax Policy and Administration (CTPA) of the growing use of collective investment vehicles for cross-border investments and whether appropriate treaty relief from withholding taxes on dividends, interest and gains from these investments is being provided.
Today's withholding tax results too often impede the efficient flow of capital across borders by causing investors in CIVs to bear tax and/or associated administrative costs not borne by similarly situated direct investors. As a result, many countries' fiscal policies of encouraging cross-border investment are being undermined, with indirect investors seeking collective investment options that do not suffer a withholding tax burden.
The problems that CIVs and their investors encounter obtaining treaty relief arise in many contexts, from publicly traded retail funds to collections of pension funds seeking administrative efficiencies, and do not all suggest the same solutions. What the problems have in common, however, is that they should benefit from serious multilateral efforts to improve on the status quo without sacrificing important tax administration goals.
SIA believes there is a very good prospect that OECD work in this area, undertaken in close cooperation with the financial community, could yield proposals for change that would benefit both member governments and investors. Governments would benefit from more effective implementation of their country's economic policies concerning cross-border investment. Investors would obtain more collective investment opportunities free of unintended withholding tax penalties.
This Roundtable creates an important opportunity for business and public sector representatives to explore the issues and the possibilities for constructive change. SIA looks forward to continuing to work toward solutions to the technical and practical issues presented by CIVs.
[1] The Securities Industry Association brings together the shared interests of approximately 600 securities firms to accomplish common goals. SIA members (including investment banks, broker-dealers, and mutual fund companies) are active in all U.S. and foreign markets and in all phases of corporate and public finance. According to the Bureau of Labor Statistics, the U.S. securities industry employs nearly 800,000 individuals, and its personnel manage the accounts of nearly 93-million investors directly and indirectly through corporate, thrift, and pension plans. (More information about SIA is available at: www.sia.com.)