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| {{isdaanat|Tax}} | | {{isdamanual|Tax}} |
| ''NB - the {{1992ma}} and {{2002ma}} versions are '''identical'''
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| Tax and Stamp tax are meant to be mutually exclusive. Here’s what the [[File:ISDA 2002 User Guide.pdf|ISDA User's guide]] has to say about it, in a footnote on page 58.
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| :''“{{isdaprov|Tax}}” is defined in Section {{isdaprov|14}} as any tax, charge or other similar listed items, except a stamp, registration, documentation or similar tax (''i.e.'', a “{{isdaprov|Stamp Tax}}” as defined in Section {{isdaprov|14}} of the 2002 Agreement).''
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| ===Ok, so why leave out {{isdaprov|Stamp Tax}}?===
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| If you compare this definition with the equivalent definition of {{gmslaprov|Tax}} in the {{gmsla}} you might find yourself idly wondering about this strange little exception, missing from the GMSLA, for {{isdaprov|Stamp Tax}}. I know I did. Interestingly (or not, depending on your perspective) the drafters of the {{2002ma}} neglected to make use of the opportunity to use the definition of “{{isdaprov|Stamp Tax}}” in place of the less elegant “''stamp, registration, documentation or similar tax''”. But this might be the reason for the [[carve-out]]: {{isdaprov|Stamp Tax}} has its own little representation in Section {{isdaprov|4(e)}}.
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| “{{isdaprov|Tax}}” features in the {{isdama}} as follows:
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| *'''Section {{isdaprov|4(a)}}''': To furnish specified information, including as regards (at {{isdaprov|4(a)(iii)}}) any forms required to pay {{isdaprov|Tax}} without withholding, leading on to...
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| *'''Section {{isdaprov|2(d)}}''': All payments are made without withholding or deduction unless required by law, and (where withholding IS required by law and the {{isdaprov|Tax}} is an {{isdaprov|Indemnifiable Tax}}) a {{tag|gross-up}} is required.
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| *'''Section {{isdaprov|4(e)}}''': Each party pays its own {{isdaprov|Stamp Tax}} on execution of the {{isdaprov|Agreement}} (and [[Indemnity|indemnifies]] the other party if its taxing jurisdiction imposes about a stampable amount on the other party)
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2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual™
Tax in a Nutshell™
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The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it 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.
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Related agreements and comparisons
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Click here for the text of Section Tax in the 1992 ISDA
They’re the same! No comparison necessary!
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Resources and Navigation
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Overview
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
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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- The JC’s famous Nutshell™ summary of this clause
- Ok, so why leave out Stamp Tax?
See also
References