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House Passes Legislation to Enhance U.S. Funds’ Ability to Compete Internationally
Washington, DC, June 25, 2004 - The Institute strongly supports the House of Representatives’ approval of H.R. 4520, the American Jobs Creation Act of 2004. H.R. 4520 would make U.S. mutual funds available to foreign investors without adverse U.S. withholding tax treatment.
Besides the changes to U.S. tax rules for foreign investors, H.R. 4520 includes a number of other tax provisions that might affect mutual funds and their shareholders. Among other things, the legislation would:
- make distributions attributable to gain from dispositions of “U.S. real property interests” subject to withholding when paid to a foreign investor;
- permit taxpayers to elect not to use the average exchange rate for the year in translating foreign taxes paid into dollars to determine the foreign tax credit available;
- permit registered investment companies to take a deduction for a deficiency dividend where the taxpayer determines that an adjustment of tax liability is appropriate, and files a statement attached to an amended or supplemented tax return.
The Institute has long supported measures that would enhance the international competitiveness of U.S. mutual funds. Most recently, in a June letter to House officials, the Institute stated that H.R. 4520 would enhance the attractiveness of U.S. funds overseas by treating distributions of short-term capital gains and U.S.-source interest income by U.S. funds to foreign investors as exempt from U.S. withholding tax.