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

Dear Valued Customers,

We have been notified by our counterparty broker on the subject matter. Please read further on this important notification as you might have PTP securities held with us as at 26 October 2022.

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

Please find below a summary table of the above for your reference:-

Section 1446 Withholding Tax

When can it apply?

Existing Withholding Type
Section 1446(a)

New Withholding Type with effect from 1st Jan 2023
Sections 1446(a) 1446(f)

PTP Distributions (dividends) 37% (for non-corporate entities),
21% (for corporate entities),
0% 		37% (for non-corporate entities),
21% (for corporate entities),
0%
PTP sales
Certain PTP Distributions 		NIL
37% (for non-corporate entities),

21% (for corporate entities),
0% 		10%
37%+10% (for non-corporate entities),
21%+10% (for corporate entities),
0%

In view of the significant impact on the imposition of new withholding tax, please take note on the following effective dates and actions to be taken.

Date

Actions

14/11/2022

  1. No BUY order on PTP securities

  2. No Transfer In request for PTP securities

28/12/2022

  1. Last day to SELL off PTP securities

29/12/2022

  1. No BUY & SELL of PTP securities

01/01/2023

  1. Transfer out is allowed, subject to acceptance of intended broker.


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 appropriate actions to avoid the possible impact 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.