Capital Gains Tax (“CGT”) in portfolio investments has traditionally been overlooked by many in the investment management industry, since it was typically insignificant, and any CGT that did arise was addressed by the fund administrators. Over a number of years, however, attitudes of both the taxpayer and tax authority have changed—a trend we expect to continue in line with the global trend towards greater regulation and fund transparency.
Governments in investment-class markets are increasingly imposing CGT on gains derived by non-resident investors. This can impact funds anywhere in the world, for example: a US or EMEA fund holding Indian, Pakistan and/or UK investments. The focus on net asset value (“NAV”) inaccuracies has also increased due to greater pressure from auditors, regulators, and investors to appropriately comply with all local tax requirements
The impact of non-resident CGT creates a number of challenges:
- Difficulties in calculating NAV and ensuring CGT is appropriately accrued for, and to prevent any pricing errors
- Tax agency and associated tax compliance, payment, and filing requirements
- Preparing CGT numbers for statutory financial accounts while ensuring that correct accounting standards are being appropriately applied
To support your existing in-house capability, we have developed iPACS Global CGT as part of the iPACS Fund Tax Reporting suite of solutions. iPACS Global CGT is a disruptive tax technology, developed by Deloitte for asset managers and asset servicers, to help them manage portfolio-level CGT. It provides a single solution with a global, technology-led offering, providing efficiency while improving quality.