SIE practice questionhardADRs
Which tax issue is unique to holding ADRs?
- AForeign withholding tax may apply to dividends✓ Correct answer
- BAll dividends are tax-free
- CThere are no tax implications
- DDividends are always paid in local currency
Explanation
Why A — Foreign withholding tax may apply to dividends
Dividends from ADRs may be subject to foreign withholding tax. They are not tax-free, have tax implications, and are paid in U.S. dollars, not local currency.
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