Payer Tax Representations - ISDA Provision

From The Jolly Contrarian
Jump to navigation Jump to search

2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual

Resources and navigation

Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project
Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14
Events of Default: 5(a)(i) Failure to Pay or Deliver5(a)(ii) Breach of Agreement5(a)(iii) Credit Support Default5(a)(iv) Misrepresentation5(a)(v) Default Under Specified Transaction5(a)(vi) Cross Default5(a)(vii) Bankruptcy5(a)(viii) Merger without Assumption
Termination Events: 5(b)(i) Illegality5(b)(ii) Force Majeure Event5(b)(iii) Tax Event5(b)(iv) Tax Event Upon Merger5(b)(v) Credit Event Upon Merger5(b)(vi) Additional Termination Event

Index — Click ᐅ to expand:

Section Payer Tax Representations in a Nutshell
Use at your own risk, campers!

Payer Tax Representations. Under Section 3(e) each party makes the following representation:

It is not required by any applicable law, or governmental practice in any Relevant Jurisdiction to deduct or withhold any Tax from any payment (other than interest under Section 9(h)) due by it to the other party. In making this representation, it may rely on:

(i) the accuracy of any Payee Tax Representation from the other party;
(ii) the other party providing tax documents as required under Section 4(a) and those documents being effective; and
(iii) the other party telling it if its Payee Tax Representations are not accurate, as is required under Section 4(d);

It will not be a breach of this representation to rely on clause (ii) above where the other party does not deliver a Section 4(a)(iii) document by reason of material prejudice to its legal or commercial position.
view template

Full text of Section Payer Tax Representations

Payer Tax Representations. For the purpose of Section 3(e), Party A and Party B each makes the following representation:

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 9(h) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, except that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.
view template

Related agreements and comparisons

Related Agreements
Click here for the text of Section Payer Tax Representations in the 1992 ISDA
Comparisons
Template:Isdadiff Payer Tax Representations

Get in touch
Comments? Questions? Suggestions? Requests? Insults? We’d love to hear from you.
Sign up for our newsletter

Content and comparisons

Template:M comp disc 2002 ISDA Payer Tax Representations
Template

Summary

Section 3(e) is the operational part of the ISDA that triggers this representation, which ISDA’s crack drafting squad™ included in the preprint template Schedule rather than in the preprinted ISDA Master Agreement proper, perhaps nervous that the negotiation community might want to futz around with it.

Well, in nearly thirty years, they haven’t: ones intentions about tax when one makes a payment, rather than when one receives it, is a topic that even a seasoned negotiator — one accustomed to finding controversy where others would not, after all — will struggle to get animated about.

Thus this handsome slug of text, unmolested, sits in nigh-on every ISDA Master Agreement, just one of those things that passes unremarked in the world of financial derivatives.
Template

See also

Template

References