Markit to Establish First Industry-wide Tax Form Sharing Service
Markit, a financial information services company, today announced it is coordinating an industry-wide initiative, in partnership with Compliance Technologies International ("CTI"), to help ease the administrative workload associated with sharing U.S. tax forms.
As part of this initiative, Markit and CTI propose to seek a Memorandum of Understanding with the Internal Revenue Service (IRS) which will enable financial institutions to share U.S. withholding tax forms submitted electronically by beneficial owners and intermediaries. All investors need to provide these forms, known as W-8 and W-9 tax forms, when investing in the U.S. to prove their withholding tax status.
The new service would be available via Markit Document Exchange, the market standard service for financial institutions to exchange compliance and regulatory documents. The tax validation tools provided by CTI, including its electronic W-8 application, will be integrated within Markit Document Exchange, allowing financial institutions to submit, store, review and exchange electronic W-8 tax forms with multiple counterparties using a single platform.
The initiative is backed by the following financial institutions:
Bank of America Merrill Lynch
Royal Bank of Scotland
Penny Davenport, Managing Director and Head of Markit Document Exchange at Markit, said: "As cross-border tax issues remain at the forefront of governments' priorities, we expect the administrative burden associated with collecting and evaluating withholding tax forms to grow dramatically over the next few years. We are delighted to help financial institutions fulfil their tax requirements in a way that is efficient from an operational point of view."
Dan Burt, Executive Director and co-founder of CTI, said: "Integrating CTI's E-W8 application into the Markit Document Exchange brings two industry standards under one comprehensive offering for the financial services community. Given the overlap of our clients and the complementary nature of our product offerings, the synergies created by our relationship will be very beneficial for the financial services industry."
Tracey Jordal, SVP Compliance, PIMCO, said: "By allowing us and our clients to go through a one time online process to complete the necessary W-8s and W-9s and easily share them across all counterparties, Markit Document Exchange will lift an enormous personnel and paper burden from us and our clients who would typically need to fill out paper forms multiple times over, each time an original tax form is needed or needs to be renewed."
The new service will launch pending a receipt of a Memorandum of Understanding from the IRS.