Bank prop indexes threatened by US tax changes
IRS’s Section 871(m) rule places burdensome requirements on non-qualified indexes sold to non-US persons
Banks selling proprietary indexes that reference US companies say they will face a near-insurmountable compliance burden when changes to the US tax code kick in on January 1, 2017, with at least one dealer stating they may be forced to subject their entire product portfolio to the new rules regardless of whether they are in scope because of the tight timeline to implementation.
The changes – contained in Section 871(m) of the Internal Revenue Code – will seek to impose a 30% withholding tax on
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