2019 turned out to be another great year for Chemistry. Nobel prize in Chemistry went to the development of Lithium batteries which seem to be the future of powering everything from automobiles to cell phones. In addition, a vaccine for the deadly Ebola virus that plagued Africa a few years ago was approved in Europe and production started this year.
The following infographic shows some of the important stories from the field of Chemistry in 2019:
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Source: Compound Interest
One of the factors that investors in ADRs have to consider is the ADR Fees. This fee is charged by the depositories of the ADR program. My earlier articles on ADR fees were well received by this site’s visitors. You can find those articles below:
While those articles covered many facts about this fees, in this article I will list five additional important facts to be aware of. As the tax filing season is underway for US residents, investors may be wondering about how to deal with this fees may find these points helpful.
1.How often is the ADR Fee charged?
Usually the ADR fee is assessed once in 12 months or annually by the depository.
2. Can I include the ADR fee I paid to the purchase price of an ADR and calculate the cost basis?
Nope. You cannot add ADR fee to the cost basis.
3. How are ADR fees collected?
The depository will collect the fees based on the record date of the investor holding the ADR. For dividend paying stocks, the broker will deduct this fees from any dividends received and send it to the depository.
4.What if my ADR does not pay a dividend? How will I pay this fee?
If your ADR does not pay any dividends, then the ADR fee will be deducted from your cash portion of your account. So it is wise to hold some cash in the account.
5.Which ADRs are subject to ADR Fees?
Visit the depository sites to check if the ADR fee is applicable to the ADR you own.
BNY Mellon:
https://www.adrbnymellon.com/fees-and-disclosures/depositary-service-fee-info
Citi:
https://depositaryreceipts.citi.com/adr/guides/dsf.aspx?pageId=8&subpageid=190
Deutsche Bank:
https://adr.db.com/drwebrebrand/dr-universe/depositary-service-fee-list
5.
Nope. You cannot deduct this fees in taxes. Investment expenses are no longer deductible in Federal tax returns.
ADR fees paid in qualified retirement accounts also cannot be deducted in taxes.
So the key takeaway for ADR investors is that ADR fees should be considered as another expense for investing in foreign stocks.
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Thousands of American soldiers are stationed in the Middle Eastern countries to support continuing wars in places like Afghanistan, Syria, etc. and support work in countries like Iraq. Long after the first Gulf War, Kuwait has become an important base for US forces. Currently some 13,000 soldiers are stationed there. Other countries such as Qatar also have a significant US military footprint.
The following chart the US military presence in the Middle East:
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Source: RFE/RL
From the map, it looks like Iran is completely surrounded by US forces at least on two sides.
The Colombia Dividend Withholding Tax Rate for US residents seems to have changed to 7.01% in 2020. This is different than the 10% rate listed in the Dow Jones tax table updated for this year. But according to Deloitte, Tax Foundation and other sites the rate is defined as 8 to 7.5%.
Colombian oil giant EcoPetrol(EC) paid a dividend of $0.53 per share last month with an ex-dividend date of 12/26 of 2019. For this dividend, my broker charged a dividend withholding tax at the rate of 7.01%.
This rate was charged both in qualified retirement accounts and taxable accounts.
Last year the rate was 7.50% in all accounts. It should be noted ADR fees is in addition to the dividend withholding tax.
It is possible that Ecopetrol’s dividend rate was slightly smaller since it was a special dividend. If I get an update from Investor Relations on this, I will post an update.
In 2018, the rate was 5%. Colombia increased it to 7.50% in 2019.
Disclosure: Long EC
China is ahead of the US in technological patent applications in nine categories according to a study by Nikkei. China held the top spot based on 2017 data and accounted for 49% of all applications in the 10 categories shown in the chart below:
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Source: Nikkei
The Nikkei study concludes that Chinese firms like Alibaba(BABA) and Baidu(BIDU) will be the major innovators.
The US the leader in Quantum Computing ahead of China. In all the other categories including AI, China leads the US.
From the Nikkei report:
The BATH quartet leads China’s astonishing rise, and its acquisitions of technologies are accelerating.
The BATH companies are Baidu, Alibabam Tencent and Huawei. Baidu has filed 1,760 applications since 2015, Alibaba filed 1,378 applications, Tencent filed 946 and Huawei submitted 1,895 applications.
The full report is worth a study.
Disclosure: No Positions
