Release Date: April 22, 2016

Contact: Carol Danko, [email protected], 202-962-7390           

SIFMA AMG Submits Comments to OECD on Treaty Benefits for Investors in Non-CIV Funds

Washington, D.C., April 22, 2016 – Today, SIFMA’s Asset Management Group (SIFMA AMG) submitted a comment letter to the Organisation for Economic Co-operation and Development (OECD) in response to questions included in its recent consultation document on the treaty entitlement of non-CIV funds. 

“SIFMA AMG believes that investors in non-CIV funds should be granted access to treaty benefits to ensure the vitality of cross-border investment.  SIFMA AMG supports the OECD’s efforts in finding a workable solution to address the complexity and diversity of non-CIV funds.  But without reassurances that treaty benefits will be granted to such funds, the economy could see a reduction of investment opportunities that are crucial for growth and stability,” said Tim Cameron, head of SIFMA AMG. 

For investors, access to treaty benefits is important for purposes of avoiding an additional layer of tax.  Non-CIV funds provide investors with access to additional capital markets that provide opportunities to diversify risk and seek increased returns.

SIFMA AMG believes that the OECD’s discussion draft correctly identifies two basic approaches to granting treaty benefits to non-CIV funds.  The first approach is granting treaty benefits directly to the fund based on its own characteristics, and the second approach is granting treaty benefits based on the treaty benefits that the investors would have received if they invested directly.  SIFMA AMG favors the second approach.

Any solution to this complex policy question should balance the  concerns of the governments and need for operability.   SIFMA AMG believes the framework for CIVs that are not widely held should permit such investment funds to receive proportional treaty benefits, to the extent that underlying investors in a fund would be entitled to treaty benefits if they had invested directly in capital markets, rather than through a pooled investment fund.  As the OECD examines investor identification processes, it is important to keep in mind that clear and reasonable documentation requirements would go a long way in helping non-CIV funds to implement the systems and procedures for documentation collection.  

Read the full text of the letter here: http://www.sifma.org/issues/item.aspx?id=8589960064