Printer Friendly

MUTUAL FUND INDUSTRY ASSOCIATION ENDORSES MEASURE AIMED AT ATTRACTING FOREIGN INVESTMENT

 MUTUAL FUND INDUSTRY ASSOCIATION ENDORSES MEASURE
 AIMED AT ATTRACTING FOREIGN INVESTMENT
 WASHINGTON, July 21 /PRNewswire/ -- U.S. mutual funds could be an ideal means of attracting foreign investment to fuel U.S. economic growth, according to Congressional testimony presented today by Catherine L. Heron, vice president for tax and pension matters at the Investment Company Institute, the national association of the U.S. mutual fund industry.
 "Foreign investment in the United States, channeled through U.S. mutual funds, is a benign source of capital that will not result in foreign investors acquiring control of U.S. businesses," Heron declared in urging the House Ways and Means Committee to adopt, as part of tax simplification measures, provisions of the International Competitiveness Act (S.1748). The provisions would make the tax treatment of foreign investors in U.S. mutual funds comparable to the tax treatment afforded to foreign investors in foreign funds, she said.
 Despite the high quality of U.S. mutual funds and a growing appetite among foreign investors for mutual funds, U.S. mutual funds are severely disadvantaged by U.S. tax withholding provisions that do not apply to comparable foreign funds, Heron said. "Because interest income and short-term capital gains realized by U.S. funds are converted into 'dividend' income when distributed, foreign investors who purchase U.S. funds are subject to U.S. withholding tax on their interest income and short-term capital gain," she said. "By contrast, U.S. withholding tax generally is not paid on interest income or capital gain when a foreigner invests through a foreign fund."
 Internal Revenue Code requirements on the current distribution of mutual fund income to shareholders create another obstacle to the sale of U.S. mutual fund shares to foreign investors, Heron said. "These requirements effectively result in foreign investors paying home country tax on the U.S. fund's income and gain on a current basis. However, foreign investors in many foreign funds pay home- country tax on such income and gain only when the fund shares are sold, if ever."
 The International Competitiveness Act would permit U.S. funds to distribute to foreign investors interest income and short-term capital gains free from withholding to the same extent currently permitted for foreign funds. In addition, the bill would permit the creation of a special new corporation called an International Regulated Investment Company, or IRIC, which would invest onlye compelled to distribute income yearly, U.S. funds could compete more effectively with foreign funds which are permitted to accumulate their income and capital gains.
 Encouraging investment through U.S. mutual funds poses no risk that foreign investors would gain control of U.S. businesses, Heron pointed out, because of the funds' diversification requirements and because the fundamental investment objectives of most funds preclude investing for the purpose of gaining control.
 The Investment Company Institute's membership includes more than 3,500 mutual funds, with about 36 million shareholders and assets of about $1.47 trillion.
 -0- 7/21/92
 /NOTE: The complete text of Heron's testimony is available on request from the Investment Company Institute./
 /CONTACT: John Collins, 202-955-3535, or Betty Hart 202-955-3532, both of the Investment Company Institute/ CO: Investment Company Institute ST: District of Columbia IN: FIN SU:


KD -- DC020 -- 1347 07/21/92 12:40 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 21, 1992
Words:546
Previous Article:COMPUTALOG LTD. ANNOUNCES PROPOSED PRIVATE PLACEMENT AND RIGHTS ISSUE
Next Article:DURAMED REPORTS SECOND QUARTER RESULTS FOR 1992
Topics:


Related Articles
NATIONAL ASSOCIATION OF MUTUAL FUND INDUSTRY ENDORSES BILL AIMED AT PROMOTING FAIRNESS IN WORLD FINANCIAL SERVICES
LAST YEAR 'GREAT' FOR STOCKS, BONDS, SIA SAYS, AS UNDERWRITINGS OF EQUITY AND DEBT BOTH SURGED
INVESTMENT COMPANY INSTITUTE SUPPORTS MEASURE TO ELIMINATE BARRIERS TO INVESTMENT BY FOREIGNERS
MUTUAL FUND ASSOCIATION SUPPORTS BILL AIMED AT PROMOTING FAIRNESS IN WORLD FINANCIAL SERVICES
MUTUAL FUND INDUSTRY SUPPORTS IRA-RESTORATION BILL
INSTITUTE URGES FIRM STAND TO LIFT FINANCIAL SERVICES TRADE BARRIERS
DALBAR, Inc.: Quality Service is Key to Retaining Investors and Winning Assets
European Mutual Fund Leader* Enters U.S. Market; Deutsche Bank Affiliate Launches Nine New Funds
SEI Creates Specialized Marketing Group To Offer Its Investment Products To Banks.
Bahrain bourse green light for mega funds.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters