Gross-Up - ISDA Provision: Difference between revisions
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Amwelladmin (talk | contribs) m (Text replace - "In a nutshell" to "In a {{nutshell}}") |
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{{isdasnap|2(d)(i)}} | {{isdasnap|2(d)(i)}} | ||
====Commentary==== | ====Commentary==== | ||
In a nutshell Section {{isdaprov|2(d)}} does the following: | In a {{nutshell}} Section {{isdaprov|2(d)}} does the following: | ||
*'''Net obligation''': if a counterparty suffers withholding it generally doesn’t have to gross up – it just remits tax to the revenue and pays net | *'''Net obligation''': if a counterparty suffers withholding it generally doesn’t have to gross up – it just remits tax to the revenue and pays net | ||
*'''Refund obligation where tax subsequently levied''': if a counterparty pays gross and subsequently is levied the tax, the recipient must refund an equivalent amount to the tax. | *'''Refund obligation where tax subsequently levied''': if a counterparty pays gross and subsequently is levied the tax, the recipient must refund an equivalent amount to the tax. |
Revision as of 18:37, 29 January 2015
In gory detail
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Commentary
In a Nutshell™ Section 2(d) does the following:
- Net obligation: if a counterparty suffers withholding it generally doesn’t have to gross up – it just remits tax to the revenue and pays net
- Refund obligation where tax subsequently levied: if a counterparty pays gross and subsequently is levied the tax, the recipient must refund an equivalent amount to the tax.
- Indemnifiable Tax: the one exception is “Indemnifiable Tax” - this is tax arises as a result of the payer’s own status vis-à-vis the withholding jurisdiction. In that case the payer has to gross up.