Managing intermediary structures within tax operations has long been a complex task. These structures typically feature multiple layers of ownership and a variety of beneficial owners, each with differing tax treatments and eligibility requirements.
According to Taina, the operational hurdles, including diverse withholding statements, intricate income allocations, and the detailed calculation of withholding and blended rates, add layers of complexity.
Monitoring changes in these structures is an ongoing challenge. Tax operations teams must continually track shifts in income allocations and movements of beneficial owners while adapting to any circumstantial changes at each structure’s level. This continuous adaptation ensures compliance but demands a significant amount of vigilance and resource allocation.
Feedback from leading industry contacts underscores the ongoing struggles with intermediary (IMY) structures. A Taxes and Reporting Lead at a Global Tier 1 Bank shared their experiences, stating, “IMYs, Non-Qualified Intermediaries, and Non-Withholding Foreign Partnerships were all a pain at my previous institution and Non-Withholding Foreign Trusts continue to be real pain here too. Our main challenges revolve around validating and managing monthly allocation changes, monitoring the movement of underlying investors and beneficiaries, and handling ongoing withholding requirements.”
Moreover, a professional at Global Custodian revealed their approach, “We do find IMY structures challenging. I led a meeting last week where we discussed these and transparent entities and the difficulties we have in reconciling and tracking them across the organisation. The next step is to ascertain what the need is for the enterprise and potentially looking for a solution and using it in NRA areas, hedge fund services, Fund Accounting, Custody etc…”
Despite decades of challenges, the industry might not have to accept these pains indefinitely. TAINA is currently developing IMY 2.0, promising substantial improvements that will streamline the creation, updating, and exporting of IMYs within the TAINA Platform. This innovation includes enhancements to our Intermediary Tools, Digital Withholding Statement Functionality, and Multi-tier Manager, all aimed at meeting the demanding needs of the industry.
The enhancements and new tools are designed to simplify processes, reduce operational burdens, and improve efficiency across tax operations. By integrating advanced technologies and solutions, managing intermediary structures could soon become a less daunting task, paving the way for more streamlined operations and compliance processes.
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