Longer withholding tax reclaim windows can be useful but faster recoveries deliver better results than relying on default timelines. Acting early allows investors put recovered cash to work sooner.
In my previous contribution, I covered Taiwan’s recent decision to extend its Statute of Limitations for withholding tax (WHT) reclaims from five to ten years in certain cases. It’s a positive step, particularly for investors who may have missed the initial window. While extended deadlines provide flexibility, they may result in claims being submitted closer to the expiry deadline.
These near-expiry filings are rarely intentional. Most often, they result from severe backlogs, competing priorities or standardized recovery processes that treat the Statutes of Limitation as the default timeline rather than a last resort.
The opportunity cost of waiting
The time value of money is a basic financial truth. A dollar today is worth more than a dollar in the future due to its potential earning capacity through investment and the eroding effect of inflation. Delaying reclaims means delaying reinvestment. The longer capital sits idle, the greater the opportunity cost.
When large sums are involved, that lost reinvestment potential compounds quickly. I have seen fund managers surprised at how much more value they retain when they shift from meeting deadlines to maximizing outcomes by reclaiming faster.
Think of it this way: if you had a delayed trade settlement costing you additional yield, it would be flagged immediately. Yet with tax reclaims, similar delays often go unquestioned.
Faster recovery reduces risk
While some jurisdictions, like Taiwan, are extending reclaim windows, many others still impose much shorter limitation periods, sometimes just two or three years. That time can pass quickly. I’ve seen cases in which claims expire simply because they sat in a queue for too long.
It’s also worth noting that once a claim is submitted, the timing pressure does not go away. Tax authorities often raise queries, the response deadlines for which can be tight. In some markets, you may have as little as ten days to reply. When that overlaps with a competing priority, there may not be enough time to act.
Challenging the norm
For many asset owners, recovery timing is rarely prioritized. The assumption is often that if you’re within the statutory deadline, that’s good enough. It’s worth asking: why wait if you don’t have to?
Accelerating recoveries is one of the simplest ways to improve outcomes. By reinvesting recovered WHT into a portfolio sooner, it can start contributing to returns once more or simply strengthen overall cash flow at an earlier point.
Aim to file claims in the year after the income has been received. The difference has a real impact.
Make time work for you
Having more time to file is useful, but relying on the full window comes at a cost. A reclaim process that prioritizes speed, coverage and strategic timing will always outperform one that merely meets the deadline.
In withholding tax - as in investing - timing matters.
Reuben John is managing director, DACH, UK & IE, at WTax. The firm is a member of Investment Officer’s panel of experts.
