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Qualified Interest Income Percentages

The PATH Act eliminated the US withholding taxes on certain dividends paid by US-registered investment companies to Non-Resident Alien investors that are reported as Qualified Interest Income.


Historical Background


In 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The PATH Act made permanent the elimination of US withholding taxes on certain dividends paid by US registered investment companies (RICs) to Non-Resident Alien (NRA) investors that are reported as Qualified Interest Income (QII). RICs include those companies that also have registered 2a-7 money market funds.


Overview of QII Implications


NRA shareholders are normally subject to a 30% withholding tax, depending on the country and the tax treaty rate on income and short-term capital gain dividends paid by a mutual fund, unless such dividends are designated as exempt from NRA withholding tax. As a result of PATH Act no withholding applies to dividends based on a RIC’s QII, which includes (i) original issue discount on an obligation payable within 183 days of issuance, (ii) interest on an obligation in registered form (other than interest on an obligation issued by an obligor in which the RIC is a 10 percent shareholder or interest that does not qualify as portfolio interest), (iii) interest on deposits, and (iv) interest-related dividends received from other RICs. Short-term capital gain dividends are dividends based on short-term capital gains realized by a RIC.

The distributions that have been identified by State Street Institutional Funds as QII and thus exempt from NRA withholding include all of our share classes. The distributions are applicable to NRA shareholders and their advisors and are not applicable to shareholders filing United States income tax returns. Please click here for updated and fund-specific QII information. We recommend that you consult a professional tax adviser for further information.


About State Street Global Advisors


State Street Global Advisors serves governments, institutions and financial advisors with a rigorous approach, breadth of capabilities and belief that good stewardship is good investing for the long term. Pioneers in index, ETF, and ESG investing and the world’s fourth-largest asset manager*, we are always inventing new ways to invest.

* Pensions & Investments Research Center, as of December 31, 2020.