What are Publicly Traded Partnerships (US PTP)?

A publicly traded partnership (PTP) is a business organization owned by two or more co-owners whose shares are regularly traded on an established securities market. It is a type of limited partnership managed by two or more partners (including individuals, corporations, or other partnerships) and is funded by limited partners who provide capital but have no management role in the partnership.

Are there charges for Publicly Traded Partnerships (US PTP)?

The US Internal Revenue Service has issued a new provision under Section 1446(f) of the Internal Revenue Code that primarily impacts non-US persons who invest in US Publicly Traded Partnerships (“PTP”) Securities. 

With effect from 1 January 2023, non-US persons may incur a 10% withholding tax on the gross amount from any disposition of interests in US PTP securities (as compared to 0% currently).

How does this impact me?

In view of this update, Brokerage will cease buy orders and transfer-in requests on US PTP securities with effect from 19 December 2022. From the same date, only sell orders will be accepted.

If you currently hold US PTP securities and wish to sell them, you should place your sell orders by 28 December 2022 to ensure sufficient time for the execution of the trade(s) before 1 January 2023. We will continue to support the liquidation of US PTP security positions beyond 31 December 2022.

Clients who hold US PTP securities after 31 December 2022 may be impacted by the additional withholding tax set out above. Please take note and review your portfolio accordingly to minimise the possible impact from holding these securities.

For more information, please refer to the US IRS website on the US PTP withholding tax here, and the list of US PTP securities here. Kindly note that the US PTP securities list is non-exhaustive and may change at any time.