Tax - ISDA Provision
2002 ISDA Master Agreement
Section Tax in a Nutshell™ Use at your own risk, campers!
Full text of Section Tax
Related agreements and comparisons
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Content and comparisons
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.