Dealers trash Section 871(m) reforms
New equity derivatives tax reforms published by the US Treasury have been called a "joke" and "unworkable" by dealers. Without another chance to influence the final drafts, though, they have no choice but to start implementing the necessary changes
Equity-linked instruments (ELIs) are the latest products to be trounced by US lawmakers' anti-tax-avoidance crusade. Local regulations have long subjected US-source stock dividend payments to overseas clients to a 30% withholding tax, as well as on substitute payments on securities loans, sale-repurchase agreements, and similar transactions referencing US equities. Until 2010, however, one perceived loophole remained: so-called dividend-equivalent payments to foreign persons packaged in notional
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