Withholding Information for Non-U.S. Unitholders:
Non-U.S. unitholders are subject to U.S. taxes and withholding with respect to their income and gain from owning Westlake Chemical Partners units. Although our distributions to non-U.S. unitholders have always been subject to withholding at the highest applicable effective tax rate, the U.S. Tax Cuts and Jobs Act of 2017 included additional withholding rules that became effective January 1, 2023.
In addition to implementing new withholding obligations on sales transactions, new regulations have increased the amount of withholding on distributions to you and sales of your common units by you.
Starting January 1, 2023, for publicly traded partnerships that have income that is effectively connected with a U.S. trade or business (such as Westlake Chemical Partners), sales of units by non-U.S. investors are subject to a new withholding equal to 10% of the sales proceeds (as further described below with respect to “Withholding Information for Non-U.S. Unitholders’ Brokers Regarding Sales Transactions”) and distributions are subject to an additional 10% withholding to the extent the distribution is in excess of the partnerships’ cumulative net income and sales on gains at 10%. We expect this additional 10% withholding to apply to each of our future distributions and on proceeds from the sales of our units.
After January 1, 2023, we will post Qualified Notices to this website, communicating to the brokers who hold units on behalf of non-U.S. unitholders that they should withhold on all of our distributions as if 100% of the distribution is attributable to income that is effectively connected with a U.S. trade or business and that 100% of the distribution is in excess of our cumulative net income.
Withholding Information for Non-U.S. Unitholders’ Brokers Regarding Sales Transactions:
The transferee of an interest in a partnership that is engaged in a U.S. trade or business is generally required to withhold 10% of the amount realized by the transferor unless the transferor certifies that it is not a foreign person. Starting January 1, 2023, the brokers are required to implement this withholding obligation with respect to transfers of interests in publicly traded partnerships. Treasury regulations provide that the amount realized on a transfer of an interest in our common units will generally be the amount of gross proceeds paid to the transferor’s broker.
Westlake Chemical Partners will not satisfy any of the exceptions for withholding on sales of our units by non-U.S. investors. Brokers who hold our common units on behalf of non-U.S. investors should withhold on sales transactions as if 100% of the gain is effectively connected to a U.S. trade or business.