With the current investment rate environment being what it
is—low—fund managers and management companies are
looking for more stability and better returns. However, for many,
this is proving difficult. The complexity of fund structures means
that it could be easy to overlook certain processes that could be
improved—where should you even begin? In my industry
experience I have seen a recurring area that fund managers should
be thinking about: withholding tax.
What I've seen is that sub-custodians, which are often part
of bigger groups, tend to minimise their own risk of liability
towards tax authorities by, when in doubt, levying more rather than
less tax. This strategy makes perfect sense because nobody wants to
be the weakest chain in the group by incurring tax penalties by
local governments. Administrators and custodians, for their part,
typically have time to cover some tax reclaims and relief at source
but often not the entire range of investment markets. The tax
