Template:Nutshell 2002 ISDA 2(d): Difference between revisions
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{{isdaprov|2(d)}} '''{{isdaprov|Deduction or Withholding for Tax}}'''. | {{isdaprov|2(d)}} '''{{isdaprov|Deduction or Withholding for Tax}}'''. | ||
:(i) {{isdaprov|Gross-Up}}. The parties must pay without withholding unless required by law. Where a | :(i) {{isdaprov|Gross-Up}}. The parties must pay without withholding unless required by law. Where a payer has to withhold, it must:— | ||
::(1) promptly tell the recipient | ::(1) promptly tell the recipient; | ||
::(2) promptly pay the amount | ::(2) promptly pay the withheld amount to the relevant authorities (including the withholding on any required {{isdaprov|gross-up}}); | ||
::(3) | ::(3) give the recipient a receipt for the tax payment; and | ||
::(4) | ::(4) gross up any {{isdaprov|Indemnifiable Tax}}, so that the recipient receives the amount it would otherwise have received (free of {{isdaprov|Indemnifiable Taxes}}). However, the payer need not gross up any withholding that arose only because:— | ||
:::(A) the recipient | :::(A) the recipient did not provide Section {{isdaprov|4(a)}} tax information, or breached its {{isdaprov|Payee Tax Representations}}; or | ||
:::(B) | :::(B) the recipient's {{isdaprov|Payee Tax Representations}} were untrue other than because of (I) any regulatory action taken after execution of the {{isdaprov|Transaction}} or (II) a {{isdaprov|Change in Tax Law}}. <br> | ||
:(ii) '''Liability'''. If:— | :(ii) '''Liability'''. If the payer :— | ||
::(1) | ::(1) is required by law to withhold a ''non''-{{isdaprov|Indemnifiable Tax}}; | ||
::(2) | ::(2) nonetheless does not do so; and | ||
::(3) | ::(3) suffers by direct assessment a liability for that {{isdaprov|Tax}}, | ||
:then, | :then, unless the recipient has satisfied the {{isdaprov|Tax}} liability directly, it must reimburse the payer for that liability (plus interest, but not penalties unless it failed to provide tax information required under Section {{isdaprov|4(a)}}, or breached any {{isdaprov|Payee Tax Representations}}. <br> |