Tax - 1992 ISDA Provision

1992 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Tax in a Nutshell™ The JC’s Nutshell™ summaries are moving to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get them here. Sign up at Substack. Tax in all its glory “Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. edit Related agreements and comparisons Related Agreements Click here for the text of Section Tax in the 2002 ISDA Comparisons They’re the same! No comparison necessary! Resources and Navigation This provision in the 2002 Resources Wikitext | Nutshell wikitext | 2002 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA 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 Deliver • 5(a)(ii) Breach of Agreement • 5(a)(iii) Credit Support Default • 5(a)(iv) Misrepresentation • 5(a)(v) Default Under Specified Transaction • 5(a)(vi) Cross Default • 5(a)(vii) Bankruptcy • 5(a)(viii) Merger Without Assumption • Termination Events: 5(b)(i) Illegality • 5(b)(ii) Tax Event • 5(b)(iii) Tax Event Upon Merger • 5(b)(iv) Credit Event Upon Merger • 5(b)(v) Additional Termination Event • Index: Click ᐅ to expand: 2002 ISDA - Premium 1992 ISDA - Premium 1992 ISDA Premium version of this page

Overview

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The 1992 ISDA and 2002 ISDA versions are identical. “Tax” features in the ISDA Master Agreement as follows:

• Section 4(a): To furnish specified information, including as regards (at 4(a)(iii)) any forms required to pay Tax without withholding, leading on to...
• Section 2(d): All payments are made without withholding or deduction unless required by law, and (where withholding IS required by law and the Tax is an Indemnifiable Tax) a gross-up is required.
• Section 4(e): Each party pays its own Stamp Tax on execution of the Agreement (and indemnifies the other party if its taxing jurisdiction imposes about a stampable amount on the other party)

Summary

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Tax and Stamp Tax are meant to be mutually exclusive and both refer to duties levied on payments under the swap Transaction itself and not under hedges to it, so be careful when using them (especially in the context of delta-one synthetic equity swaps where the main stamp duty and capital gains issues accrue on Hedge Positions. For those you might want to introduce a conceopt like Local Taxes, or something similar.

Here’s what the ISDA Users’ guide has to say about Tax and Stamp Tax, in a footnote on page 58.

“Tax” is defined in Section 14 as any tax, charge or other similar listed items, except a stamp, registration, documentation or similar tax (i.e., a “Stamp Tax” as defined in Section 14 of the 2002 Agreement).

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See also

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• Tax - GMSLA Provision