A Collective Effort: Inside ViewTrade’s Journey to Achieving Qualified Intermediary Status 

You might not expect it given my role today, but my first mission at ViewTrade wasn’t to expand our client base or amplify our business. Instead, it was to persuade a pioneering broker in Taiwan to become a Qualified Intermediary (QI) – a move that was not initially understood by many in the industry.

What is a Qualified Intermediary?

It may be beneficial to the reader to begin by defining what a Qualified Intermediary is. Section 1441 of the United States Internal Revenue Code requires income tax withholding from payments made to non-U.S. persons, who typically will not have a U.S. Taxpayer Identification Number. Banks or other financial institutions outside the U.S. may establish an agreement with the U.S. Internal Revenue Service to become a QI, and must maintain records of the U.S. or non-U.S. status of their customers. They may also provide income tax reporting and tax withholding.

Forming a Vision

In practice, brokers outside the U.S., including those based in Taiwan, are required to obtain QI status to facilitate the trading of US securities if they wish to conduct these trades directly. This benefits their clients by enabling them to defer capital gains taxes when selling and reinvesting, preserving the client’s capital and allowing it to remain invested.

Sonia Liao, former Head of International Finance at CTBC, played a pivotal role in helping chart the course for Taiwanese brokers to become QIs. By serving as the first responsible registered operational auditor (RO) in Taiwan, she laid the foundation for a new era in tax compliance and regulation. Despite CTBC being a relatively small broker in Taiwan, it embarked on a transformative journey under Sonia’s insightful leadership. Sonia and her team navigated the complexities and challenges and, through her vision and strategic action, effectively transformed CTBC into one of the largest brokers in Taiwan.

Taking the Leap

I vividly recall the day ViewTrade onboarded our first broker as a QI. The move created a ripple effect throughout the industry, prompting peers and regulators to question our motivation given the seeming lack of immediate benefits.

This journey was not without its hurdles, facing us with a sea of criticism and skepticism. The path was tumultuous – yet ultimately enlightening. The contributions of talented colleagues like Levi Tsai, who enabled us to make great strides despite his being an intern and on the brink of his military service, and Ross McGill, who traveled to Taiwan for a QI seminar, were instrumental in propelling our mission forward.

Even after CTBC became a QI, many of Taiwan’s leading brokers remained hesitant. However, ViewTrade’s persistent efforts and strategic communications gradually shifted the narrative, influencing many of the major players to attain QI status. By engaging regularly with journalists, we managed to spotlight the importance and urgency of this initiative, as showcased in a Smart Business Weekly article that highlighted the impending 30% penalty/tax for non-compliance.

Industry Transformation

Fast forward five years, and our initial efforts have borne fruit. Today, all leading brokers in Taiwan have attained QI status, simplifying their tax reporting and compliance operations and those of their customers. The introduction of new tax acts and the strengthening of US-Taiwan relations have paved the way for these tax reductions, further validating our foresight of the importance and benefits of becoming a QI. The benefits are many, but above all, these efforts reflect what it really means to be part of ViewTrade – a company that doesn’t shy away from voicing and doing what’s right.

A heartfelt thanks to Sonia Liao, Levi Tsai, Ross McGill, Bob Dombrowski, Kenneth Chan, Kevin Xie, Tony Petrilli and James St Clair, whose relentless efforts, unwavering support and invaluable contributions have played a pivotal role in turning our vision into reality.