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It is not uncommon for certain giant companies to list their stocks in multiple country stock exchanges.

For instance :-

  • BP listed in NYSE (New York Stock Exchange) and LSE (London Stock Exchange).
  • HSBC listed in NYSE, LSE and HKSE (Hong Kong Stock Exchange)

As far as I know, there are 30% dividend tax for the stocks in NYSE. For BP & HSBC which I had mentioned, I know their dividend are tax free both in LSE and HKSE.

In that case, does it make more sense to purchase those stocks in dividend tax free stock exchange? Is there other factors which I haven't taken into consideration?

  • And where are you from? How much is the dividend tax at home? – littleadv Jul 6 '14 at 6:05
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You might have to pay a premium for the stocks on the dividend tax–free exchanges. For example, HSBC on the NYSE yields 4.71% versus HSBC on the LSE which yields only 4.56%. Assuming the shares are truly identical, the only reason for this (aside from market fluctuations) is if the taxes are more favorable in the UK versus the US, thus increasing demand for HSBC on the LSE, raising the price, and reducing the yield. A difference of 0.15% in yield is pretty insignificant relative to a 30% versus 0% dividend tax. But a key question is, does your country have a foreign tax credit like the US does? If so you (usually) end up getting that 30% back, just delayed until you get your tax return, and the question of which exchange to buy on becomes not so clear cut. If your country doesn't have such a tax credit, then yes, you'll want to buy on an exchange where you won't get hit with the dividend tax.

Note that I got this information from a great article I read several months back (site requires free registration to see it all unfortunately). They discuss the case of UN versus UL--both on the NYSE but ADRs for Unilever in the Netherlands and the UK, respectively. The logic is very similar to your situation.

  • +1 In addition to foreign tax credits also worth mentioning tax treaties that may affect this (for example US-Canada treaty). – littleadv Jul 6 '14 at 6:27
  • @littleadv I'm guessing OP's country (seems to be Malaysia) has a tax treaty with the UK and Hong Kong but not the US, hence the 30% dividend tax on NYSE stocks. – Craig W Jul 6 '14 at 6:39

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