Changes in Taxation Policies for Overseas Stock Funds and Monthly Dividend ETFs
With the alteration in the taxation method of overseas equity funds' dividends starting in 2023, there is growing discontent among investors over reduced dividend payments. The issue of double taxation has become particularly contentious among those investing through tax-advantaged accounts like ISA and IRP. The National Tax Service decided to levy additional taxes domestically without refunding withholding taxes deducted in the US, highlighting complexities in the tax system. Although the government is considering a measure where taxpayers can earn credits for taxes paid abroad to offset domestic liabilities, several variables need consideration owing to the intricate nature of the situation.
Following the tax code revision by the National Tax Service, investors in overseas monthly dividend ETFs are facing unforeseen tax burdens. The abolition of the refund process for foreign fund dividend withholding tax has led to issues regarding double taxation, diminishing the allure of long-term investments. Consequently, domestic investors are seeking alternatives and shifting their focus to local ETFs, with domestic high-dividend ETFs like 'PLUS High Dividend Stocks' gaining particular attention. Furthermore, covered call ETFs are being viewed positively due to their relatively favorable tax implications.
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[Money+] How to Avoid 'Tax Shock' from Overseas Monthly Dividend ETFs? - Business PlusInvestors who were investing in overseas monthly dividend ETFs, which provide regular monthly dividends, are faced with an unexpected tax burden due to amendments in tax law by the National Tax Service. Consequently, there's speculation that a 'money move' from overseas monthly dividend ETFs to domestic ETFs might commence. Additionally, more investors are seeking ways to maintain the deferred tax benefits associated with retirement accounts that benefited from compound interest through long-term investments. According to the financial investment industry on the 21st, the National Tax Service will abolish the procedure of refunding the fund dividend income tax incurred overseas starting this year. Hence, investors involved in indirect overseas investments will have to pay double taxes both abroad and domestically.
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