Switzerland Announces New Procedures for Refunds of Tax Reclaims

Washington, DC, September 25, 2001 - The Swiss Federal Tax Administration (FTA) has announced new procedures under the U.S.-Switzerland Income Tax Treaty (Treaty) that will permit regulated investment companies (RICs) to receive refunds of tax reclaims for calendar years 1998, 1999, 2000, and 2001. The new procedures implement the agreement between industry representatives and the FTA. The FTA intends separately to announce the procedures under the Treaty for processing RIC tax reclaims arising in calendar year 2002.

Pursuant to the new FTA procedures, a RIC or its authorized representative must complete a declaration form (Attachment RIC) certifying "to the best of its knowledge and belief," as of March 31, 2001:

• the number of share certificates issued by the RIC,
• the number and percentage of share certificates held directly by investors, and
• the number and percentage of share certificates held directly by U.S. residents.
• If a RIC has no direct shareholders, the RIC or its authorized representative must
• certify the number of share certificates issued by the RIC,
• certify the number and percentage of share certificates held indirectly (i.e., through brokers or other intermediary accounts) by U.S. residents, and
• attach an explanation of the basis for treating indirect shareholders as U.S. residents.

In either case, a RIC would determine its percentage of U.S. residents by reference to the documentation that the RIC must maintain for accounting to the U.S. Internal Revenue Service for U.S. withholding tax purposes (for example, IRS Form W-9, IRS Form W-8).

Under the agreement with the FTA, RICs certifying more than 95 percent U.S. resident investors as of March 31, 2001 will receive a full refund of tax reclaims for calendar years 1998, 1999, 2000, and 2001. RICs certifying 95 percent or less U.S. resident investors as of March 31, 2001 will receive proportional refunds (for example, a RIC certifying 90.2 percent U.S. resident investors will receive 90.2 percent of its outstanding tax reclaims from Switzerland).

For tax reclaims that have not been previously filed with the FTA for calendar years 1998, 1999, 2000, or 2001, a RIC or its authorized representative is required to file Form 82E, together with the Attachment RIC (and, if not already filed with the FTA, an IRS Form 6166). Since the Institute and the FTA have agreed to disagree on the "beneficial owner" status of RICs, a RIC’s refund will not be delayed or otherwise affected by the RIC’s response to question one which asks whether the claimant is "beneficially entitled" to the requested refund amounts.

Tax reclaims for calendar year 1998 will be time-barred if not filed with the FTA by December 31, 2001. The FTA shortly will issue a new tax reclaim form (Form 82R) to be used by RICs for tax reclaims arising in calendar year 2002. It is presumed that RICs also will use Form 82R for tax reclaims arising in future calendar years, until otherwise notified by the FTA.