Template:M summ 2002 ISDA Tax

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).

Ok, so why leave out Stamp Tax?

If you compare this definition with the equivalent definition of Tax in the 2010 GMSLA you might find yourself idly wondering about this strange little exception, missing from the GMSLA, for Stamp Tax. I know I did. Interestingly (or not, depending on your perspective) the drafters of the 2002 ISDA neglected to make use of the opportunity to use the definition of “Stamp Tax” in place of the less elegant “stamp, registration, documentation or similar tax”. But this might be the reason for the carve-out: Stamp Tax has its own little representation in Section 4(e).