Latest news with #foreignInvestors
Reuters
an hour ago
- Business
- Reuters
Rupee falters as bullish exits, dollar strength collide
MUMBAI, June 4 (Reuters) - The Indian rupee slipped on Thursday as a combination of bullish position unwinding and dollar strength pushed the local currency to near the 86 level against the U.S. dollar. The rupee slipped to 85.9125 against the U.S. dollar before paring losses to an extent. It was last quoted at 85.85, down 0.3% on the day. The currency is now on track for its sixth decline in seven sessions, having hit 84.78 last Monday. "The market is backing off earlier long rupee bets," said a currency trader at a bank. "You can see that in the price action. Its not helping that the dollar overall has found a bit of footing and we are seeing equity outflows.' Foreign investors pulled out more than $300 million from domestic equities on Wednesday, according to preliminary data, adding to outflows of more than $1 billion in the previous three sessions. Meanwhile, the dollar index inched higher, extending Tuesday's advance that was underpinned by an unexpected rise in U.S. job openings. More labour market data is due through the week, with the key highlight being Friday's non-farm payrolls report for May — a key input for assessing the Federal Reserve's interest rate path. Asian currencies were mostly weaker, with sentiment dominated by developments around trade negotiations between the U.S. and its partners. The Trump administration has set a Wednesday deadline for countries to submit their best trade offers. President Donald Trump is expected to speak with Chinese President Xi Jinping this week, according to the White House. The call comes amid renewed tensions, with both sides accusing each other of breaching last month's agreement to roll back certain tariffs.
Reuters
3 hours ago
- Business
- Reuters
Rupee to drop on potential equity outflows, test key support
MUMBAI, June 4 (Reuters) - The Indian rupee is likely to open weaker on Wednesday, weighed down by equity outflows and corporate dollar demand for hedging and payment needs. The 1-month non-deliverable forward indicated an open in the 85.66-85.68 range, versus 85.59 in the previous session. The Indian rupee has been mostly on the back foot in recent sessions, with bankers pointing to sustained dollar demand for immediate payments, muted equity flows, and hedging activity during dollar dips. Foreign investors pulled over $300 million from Indian equities on Tuesday, according to preliminary data, adding to the more than $1 billion in outflows over the prior three sessions. "The price action hasn't been too encouraging lately (for the rupee)," a currency trader at a bank said. "Two things stand out — the rupee appears to be charting its own course, rather than following the broader Asia trend, and the underlying dollar demand remains heavy." Near-term support for the rupee is seen in the 85.60–85.70 range, an area that has attracted buyers in recent days. "The next key level to watch is 86 — a break above could prompt another wave of dollar buying," a treasury official at a bank said. Asian currencies were mixed on Wednesday, mirroring the previous session's tone. The dollar index was slightly lower after Tuesday's advance, with markets focused on the upcoming U.S. jobs report for May and developments in President Donald Trump's tariff negotiations with major trading partners, including China. The question marks around whether Trump and China President Xi Jinping will pick up the phone and have a conversation are an important driver of markets, MUFG Bank said in a note. That said, the market's sensitivity to tariff headlines appears to have waned. Intraday volatility in Asian currencies has come off. KEY INDICATORS: ** One-month non-deliverable rupee forward at 85.76; onshore one-month forward premium at 11.75 paisa ** Dollar index up at 99.22 ** Brent crude futures down 0.3% at $65.5 per barrel ** Ten-year U.S. note yield at 4.45% ** As per NSDL data, foreign investors sold a net $246.4mln worth of Indian shares on June 2 ** NSDL data shows foreign investors bought a net $53.2mln worth of Indian bonds on June 2
Forbes
a day ago
- Business
- Forbes
5 U.S. Estate Tax Surprises For Nonresident Alien Investors
Foreign investors can win big with United States investments. While holding U.S. assets can be lucrative, the U.S. estate tax regime is complex and often misunderstood by nonresident alien investors. NRAs, those who are neither U.S. citizens nor residents for estate tax purposes, are often very surprised when they learn of the challenges imposed by the estate tax rules. This article summarizes 5 estate tax surprises that often catch the NRA investor off-guard. These include the limited exemption amount, common misconceptions about asset types, the requirement to disclose the value of worldwide assets on the NRA's estate tax return, and other pitfalls that can complicate estate planning. One of the biggest surprises for NRA estates is the paltry $60,000 exemption amount for U.S. situs assets subject to estate tax. U.S. citizens and residents are taxed on the value of their assets owned worldwide, but they benefit from a very generous $13.61 million federal estate tax exemption (as of 2025), and under the Trump Administration, this may rise to an inflation-indexed $15 million in 2026. NRAs are limited to a mere $60,000 exemption for U.S. situs assets. This means that if the total value of an NRA's U.S. situs assets exceeds $60,000 at the time of death, the excess is subject to U.S. estate tax at rates ranging from 18% to 40% based on a progressive table, with amounts exceeding $1 million taxed at the 40% rate. Wealthy foreign investors typically hold significant U.S. assets such as real estate, stocks, or business interests. For them, the low exemption amount can result in substantial estate tax liability that could have been mitigated with proper advance planning and structuring. The harsh effect of the estate tax can be seen for example, by an NRA with $1.5 million in non-exempt U.S. situs assets. Assuming no treaty applied to reduce the tax and no deductions are taken, the estimated U.S. estate tax would be a punishing $532,800 (a tax hit that is over 35% of the U.S. investments, significantly eroding their value). A very common source of confusion arises when identifying which assets are subject to, or exempt from, U.S. estate tax. Many NRAs mistakenly believe that cash-related holdings are exempt from the estate tax. They do not appreciate the subtle but highly important nuances. For example, bank deposits in a U.S. bank are generally not considered U.S. situs assets due to special rules. They are thus exempt from U.S. estate tax, provided they are not connected to a U.S. trade or business. Typically, this exemption applies to cash held in checking or savings accounts, certificates of deposit, or similar instruments. Many NRAs mistakenly assume this exception applies to cash held in a U.S. brokerage account but are shocked to learn that this cash is treated differently. It is considered a U.S. situs asset subject to the estate tax. Estates of foreign uninformed investors will be faced with a surprise estate tax bill since the tax law's distinction transforms what seems like a 'safe' cash holding into a taxable asset. The U.S. estate tax treatment of U.S. stocks, U.S. mutual funds, U.S. ETFs, and similarly structured U.S. vehicles is clear. These are U.S. situs assets subject to estate tax, regardless of where they are held. It will not be a shield from U.S. estate tax simply because the assets are held in a foreign brokerage account, or in the name of a nominee. Furthermore, the custodian will usually not release the assets to heirs without receiving what is called a Federal Transfer Certificate or other proof that U.S. estate tax has been fully paid. It can sometimes take well over a year for the NRA's U.S. estate tax return on Form 706-NA to be filed, tax paid and the matter to be fully resolved with the IRS. This rule can and does, trap NRAs who hold substantial U.S. investment portfolios of through international accounts. Too many foreign investors are unaware of this exposure until it's too late. This is why advance planning should be undertaken. For example, use of a properly formed estate tax 'blocker' is often a simple and beneficial solution. Perhaps one of the most jarring surprises for NRA estates is the requirement to disclose the value of the decedent's worldwide assets when filing the U.S. estate tax return. Only the assets treated as located within the U.S. are subject to the estate tax, but the IRS requires a complete picture of the decedent's global estate to determine the computation of the tax. This requirement is often viewed as very intrusive and if more investors were aware of it, they might reconsider U.S. investments or at least, implement ownership structures to avoid the estate tax. The disclosure of worldwide asset value is required for the IRS to determine whether certain deductions and treaty-based benefits may apply and specifically to calculate the amount of allowable deductions under a special proportional deduction rule. If the estate wants to benefit from these, the disclosure must be made. Although the worldwide disclosure is technically required only if the estate claims deductions or treaty benefits, omitting the information can possibly cause the return to be treated as incomplete. This can jeopardize the estate's ability to claim any of these benefits at a later time, for example, on audit. As such, full disclosure of the value of the decedent's worldwide asset value is generally the safest course. Sophisticated investors often use blocker structures, for example, holding U.S. assets through a foreign corporation. This permits the investor to avoid U.S. estate tax entirely. At death, the decedent owns shares in a non-U.S. corporation. Since shares of a foreign corporation are generally not U.S.-situs property, they are not subject to U.S. estate tax. By holding the U.S. assets indirectly through such entities, NRA investors can avoid both the estate tax on death and the intrusive requirement to disclose worldwide assets. Such strategies are commonly used by high-net-worth individuals who want to tap the U.S. market but wish to avoid triggering the U.S. estate tax regime. Think you're good because of a treaty? Think again! Another unwelcome surprise for the foreign estate lies in the limited scope of estate tax treaties. It is true that the U.S. has estate tax treaties with certain countries to mitigate double taxation, but too often they provide less relief than expected, and as discussed, claiming treaty relief means significant disclosure about the value of worldwide wealth. Some treaties allow for a prorated exemption based on the ratio of U.S. situs assets to worldwide assets. For high-net-worth taxpayers, this may not significantly reduce the U.S. estate tax burden. Complications also when the decedent's home country also imposes estate or inheritance taxes on the assets. Quite often there is a mismatch and the lack of coordination between the two tax systems can lead to double taxation, unless specific treaty provisions apply. The foreign estate may be surprised to find that the home country's tax authorities and the IRS both claim a share of the estate. Careful planning is needed when foreign laws and U.S. laws overlap and sometimes collide. Many possibilities exist, including ownership structures and certain investments, but taxpayers must be proactive in learning and implementing the plan beforehand. For example, one lesser known but welcome surprise is the treatment of life insurance proceeds paid out on an NRA's life. Even if paid by a U.S. insurer, these proceeds are typically exempt from U.S. estate tax. The use of such insurance can provide a robust planning tool for NRAs with significant U.S. assets since the life insurance can provide liquidity to cover the U.S. estate tax without itself being taxable. Get the proper advice so that efficient planning strategies are not overlooked! Stay on top of tax matters around the globe. Reach me at vljeker@ Visit my U.S. tax blog
Yahoo
3 days ago
- Business
- Yahoo
The ‘revenge tax' buried deep in the budget bill could turn a trade war into a ‘capital war,' analyst says
Section 899 of the 'One Big Beautiful Bill' moving through Congress has raised growing alarms on Wall Street, after the once-obscure provision was initially overshadowed by the budget proposal's estimated impact on the deficit. Deutsche Bank warned that what's been dubbed the 'revenge tax' could further harm the attractiveness of U.S. assets. As Wall Street continued digesting the myriad line items in the 1,000-page budget bill that passed recently, one part has triggered an especially acute case of heartburn. Section 899 of the 'One Big Beautiful Bill' moving through Congress has raised growing alarms, after the once-obscure provision was initially overshadowed by the budget's estimated impact on the deficit. It has been dubbed the 'revenge tax' because it would increase rates for individuals and companies from countries with tax policies branded as 'discriminatory.' That means foreign investors, who own trillions of dollars in U.S. assets, could face higher levies on passive income like dividends and interest payments. Investors have already shifted toward Europe and China as President Donald Trump's aggressive tariff agenda has eroded the idea 'American exceptionalism.' Meanwhile, foreign investors are showing signs of a buyer's strike, shunning U.S. assets. For George Saravelos, head of FX research at Deutsche Bank, the idea of a revenge tax could make them even less attractive. It's also notable in the wake of a U.S. trade court's ruling Tuesday that invalidated Trump's reciprocal tariffs, as Section 899 could represent an alternative tool. 'We see this legislation as creating the scope for the US administration to transform a trade war into a capital war if it so wishes, a development that is highly relevant in the context of today's court decision constraining President Trump on trade policy,' Saravelos wrote in a note. He pointed out that Section 899 uses taxation on foreign investors as leverage to advance U.S. economic priorities and only has to meet a low bar before it can be enforced. It would also make covering deficits more difficult by lowering the de facto yield foreign government earn from U.S. Treasury bonds by nearly 100 basis points, Saravelos estimated. While the ultimate impact could be less than that, the mere introduction of more uncertainty and complexity around investing in U.S. assets 'undermines the attractiveness of dollar inflows at a time when this is already put in to question,' he warned. 'It is not unreasonable for the market to conclude that if the President is constrained on using trade policy, taxing foreign capital could be a new means of leverage,' he added. Even House Ways and Means Committee Chair Jason Smith, who supports the revenge tax, said during a panel discussion on Friday that he hopes it's never used and instead acts like more of a deterrent that stops other countries from cracking down on U.S. companies unfairly. Meanwhile, the Joint Committee on Taxation, the nonpartisan tax scorekeeper for Congress, echoed some of Wall Street's fears. Thomas Barthold, the committee's chief of staff, said in a statement to Bloomberg Tax that Section 899 would lead to a 'decline in foreign demand for US direct and portfolio investment.' This story was originally featured on
Yahoo
3 days ago
- Business
- Yahoo
The ‘revenge tax' buried deep in the budget bill could turn a trade war into a ‘capital war,' analyst says
Section 899 of the 'One Big Beautiful Bill' moving through Congress has raised growing alarms on Wall Street, after the once-obscure provision was initially overshadowed by the budget proposal's estimated impact on the deficit. Deutsche Bank warned that what's been dubbed the 'revenge tax' could further harm the attractiveness of U.S. assets. As Wall Street continued digesting the myriad line items in the 1,000-page budget bill that passed recently, one part has triggered an especially acute case of heartburn. Section 899 of the 'One Big Beautiful Bill' moving through Congress has raised growing alarms, after the once-obscure provision was initially overshadowed by the budget's estimated impact on the deficit. It has been dubbed the 'revenge tax' because it would increase rates for individuals and companies from countries with tax policies branded as 'discriminatory.' That means foreign investors, who own trillions of dollars in U.S. assets, could face higher levies on passive income like dividends and interest payments. Investors have already shifted toward Europe and China as President Donald Trump's aggressive tariff agenda has eroded the idea 'American exceptionalism.' Meanwhile, foreign investors are showing signs of a buyer's strike, shunning U.S. assets. For George Saravelos, head of FX research at Deutsche Bank, the idea of a revenge tax could make them even less attractive. It's also notable in the wake of a U.S. trade court's ruling Tuesday that invalidated Trump's reciprocal tariffs, as Section 899 could represent an alternative tool. 'We see this legislation as creating the scope for the US administration to transform a trade war into a capital war if it so wishes, a development that is highly relevant in the context of today's court decision constraining President Trump on trade policy,' Saravelos wrote in a note. He pointed out that Section 899 uses taxation on foreign investors as leverage to advance U.S. economic priorities and only has to meet a low bar before it can be enforced. It would also make covering deficits more difficult by lowering the de facto yield foreign government earn from U.S. Treasury bonds by nearly 100 basis points, Saravelos estimated. While the ultimate impact could be less than that, the mere introduction of more uncertainty and complexity around investing in U.S. assets 'undermines the attractiveness of dollar inflows at a time when this is already put in to question,' he warned. 'It is not unreasonable for the market to conclude that if the President is constrained on using trade policy, taxing foreign capital could be a new means of leverage,' he added. Even House Ways and Means Committee Chair Jason Smith, who supports the revenge tax, said during a panel discussion on Friday that he hopes it's never used and instead acts like more of a deterrent that stops other countries from cracking down on U.S. companies unfairly. Meanwhile, the Joint Committee on Taxation, the nonpartisan tax scorekeeper for Congress, echoed some of Wall Street's fears. Thomas Barthold, the committee's chief of staff, said in a statement to Bloomberg Tax that Section 899 would lead to a 'decline in foreign demand for US direct and portfolio investment.' This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
