If you are a foreign customer and you trade or hold Section 1446(f) impacted securities after January 1, 2023, there are potential implications regarding distributions and sale proceeds.
1. Distributions: If the Section 1446(f) security declares a distribution, that distribution may be subject to a new 10% withholding tax on excess cumulative net income (ECNI). ECNI refers to income earned by a publicly traded partnership that has not been previously distributed by the partnership. As a result, partnership distributions could be subject to withholding tax twice at different tax rates.
2. Sale Proceeds: If you sell Section 1446(f) securities, the sale proceeds may also be subject to a 10% withholding tax.
It is important to note that these tax implications are specific to Section 1446(f) impacted securities and may vary based on individual circumstances and the specific regulations in your jurisdiction. To fully understand and comply with the tax requirements, it is recommended to consult with a tax advisor or refer to the relevant tax regulations and documentation provided by BBAE.