NOTIFICATION ON NEW WITHHOLDING TAX ON US PUBLICLY TRADED PARTNERSHIPS (PTP) SECURITIES

Dear Valued Customers,

With reference to our announcement published on 8 November 2022, there is an update from our counterparty broker pertaining to PTP securities trading. Please read further on this important notification as you might have PTP securities held with us.

This is to inform that the U.S. Internal Revenue Service (IRS) has issued a new provision under Section 1446(f) of the Internal Revenue Code (IRC) that primarily impacts Non-U.S. Residents who invests in PTP securities. Unless an exception applies, 10% withholding tax will apply to the following with effect from 1 January 2023:-

  1. Gross proceeds from the sale of a PTP and

  2. Certain PTP distributions

Kindly be informed that our counterparty broker will not proceed with the restriction of PTP securities that was due to be implemented on Monday 14th November 2022. Hence, we will continue to support the trading of PTP securities and please find a summary of actions in the following table. While our broker continue to engage its US partners regarding this new IRC provision, you are allowed to submit buy and sell orders, share transfer requests for PTP securities until further notice.

Date

Actions

14/11/2022

  1. Allow BUY order on PTP securities as usual

  2. Allow Transfer In request for PTP securities as usual

01/01/2023

  1. Allow BUY and SELL orders on PTP securities

  2. SELL trade is subject to 10% withholding tax

  3. Transfer In and Out are allowed

  4. Additional 10% withholding tax will be imposed on distributions for certain PTP securities. This will result in:-

    1. 37%+10% (for non-corporate entities)

    2. 21%+10% (for corporate entities)


Notwithstanding the above, more updates will be provided when there is any new development.

If you are holding PTP securities, we suggest that you review your investment portfolio and take necessary action to avoid the possible impact (10% withholding tax on sales proceed and certain PTP distributions) of holding such securities from 1 January 2023. When in doubt, please consult your tax advisor for independent advice.

You may refer to the possible list of PTP securities obtained from our counterparty broker on best effort basis in our online trading portals by clicking here. Kindly note that it is not an exhaustive list of all PTP securities that are in scope for Section 1446(f). The list may be subject to change from time to time without prior notice. RHB Investment Bank ("RHBIB") assumes no responsibility for the timeliness, accuracy and completeness of this list. If the sale of security (from 1 January 2023 onwards) is not listed in the provided PTP list but falls under PTP classification, RHBIB reserves the right to claim the withholding tax from you to satisfy IRS withholding requirements.

You can visit U.S. IRS website via the below link for more details on Section 1446(f).
https://www.irs.gov/individuals/international-taxpayers/partnership-withholding

We would like to take this opportunity to thank you for your continuous support and choosing us as your preferred broker. Please do not hesitate to contact your Dealer's Representative if you have any queries.



Yours faithfully,
RHB Investment Bank Berhad 197401002639 (19663-P)

This is a computer generated letter and it is deemed to have been signed.

Disclaimer
RHBIB does not provide any advice and is not liable for any loss or liabilities arising from the use of the information, including the links and files, in this announcement. When in doubt, please consult your tax advisor for independent advice.