With the global economy turning the world into a complex web of tax laws and regulations, JPMorgan Chase & Co. has jumped into the fray in hopes of easing all of that confusion-and making a buck doing it. That's led to the launch in late February of its JPMorgan E-Tax service, a comprehensive collection of global tax news, intelligence and information available to institutional investors.
The Web-based service provides access to breaking international tax news, updates on tax industry developments, trends, policies and treaties; reports on tax rates, exemptions, capital gains, and the latest tax forms necessary worldwide. In other words, JPMorgan Chase is trying to become the go-to company for clients who need to monitor tax-related developments around the clock. And the firm's executives believe there will be lots of eyeballs for the information it's offering. "We saw from daily inquiries that we were receiving that there was a need for this product," says Lawrence Manning, head of tax services for JPMorgan Investor Services, who hopes JPMorgan's services will beat out all others in terms of the scope and instantaneous nature of service.
Like lots of endeavors in the financial services industry, the rules and regulations are constantly changing, so much so that it's becoming increasingly difficult to keep tabs of not only the changes, but the laws themselves. When business becomes multi-national that can add to the confusion for institutional investors since their core competency isn't necessarily international commerce law. And the issue gets particularly dicey when the firms doing the business have the financial well-being of multi-billion-dollar clients at stake.
To be sure, global tax issues have become increasingly complex. Whether coping with often overlooked topics such as the "value-added tax," a transactional tax imposed in several countries around the globe, or understanding how all the global tax rules interconnect, institutional investors face numerous challenges trying to make sense of it all. "Every country has a different system," points out Chris Walsh, VAT practice leader at Berwyn, PA-based Vertex.
In addition to general tax news, JPMorgan Chase's E-Tax service offers tax information from more than 85 markets around the world, including news flashes with breaking news about global changes to tax regulations and laws, and a database searchable back to 1998. Also included is the Tax Monitor, a monthly publication with updates of global industry developments and trends, policies, treaties, and market profiles that describe tax rates in different countries, including exemptions and capital gains. In addition, JPMorgan E-Tax provides the full spectrum of tax forms needed by JPMorgan clients worldwide.
JPMorgan Chase hasn't released the number of clients now using the E-Tax service, partly because it has only just launched. But Manning says clients such as investment banks, private banks and investment managers have already expressed interest. The service relies on a network of several tax professionals positioned at various locales around the globe-each tasked with keeping the E-Tax site up to date. As they learn about changes to tax codes in different nations, they quickly and automatically update the site in real time.
"Our clients have the same information virtually when we get it," he says. For the privilege, clients pay an annual subscription of at least $10,000 or more, depending on how many site licenses they require and other factors.
Beyond quick updates on regulations, the product offers a broader range of general tax information. JPMorgan executives are also touting the system's use of JPMorgan's VIEWS platform, a browser-based suite of applications enabling users to access a variety of reporting, research and analytical applications.
The platform is "a simple-to-use, Web-based product that allows customization of information at their fingertips," says Neil Henderson, svp of JPMorgan Investor Services Securities Processing and Fund Services.
According to Manning, the company viewed the product's ease of use and convenience as a key factor in its ability to eventually attract a broad base of users. "It provides those analytical and transactional tools right on their desktop," he says. Despite the challenges posed by the global maze of tax rules and regs, JP Morgan Chase appears to have a first-to-market advantage. Sources say they are unaware of any other financial or non financial institution that's offering or planning to offer a similar service in the near future.
And JPMorgan's headstart could put it in the lead for some time. Depending on the success of the E-Tax service, JPMorgan may at some point face competition from other financial services firms. But Manning says creating the infrastructure takes time, so the company hopes to cement a lead in the interim. "I think we're going to have this space a little while for ourselves," he says. "It's not an easy job to fill."
