About GWTR

• About the Product
• Assumptions
• Definitions
• Countries Covered
• Disclaimer

About the Product

EY’s Global Withholding Tax Reporter (“GWTR”) puts the accumulated international experience of one of the world’s leading professional services organizations at your fingertips. With more than 20 years of experience, the GWTR reference tool provides in-depth information on global withholding tax matters including statutory rates, treaty rates and procedures for 11 different beneficial owner types investing in 138 countries. The GWTR is designed to allow you to quickly determine withholding tax rules and procedures allowing you to manage your withholding tax risk, identify the lowest possible withholding tax rate, simplify your efforts and maximize your clients’ return on investment.

The GWTR is easy to use. It is arranged alphabetically by country of investment and, within each investment country, alphabetically by country of investor. The format flows logically; the investment country’s statutory law is detailed followed by tax rate matrices citing the rate applicable to the various income or investor types for each country covered.

The tax rate matrix layout provides easy identification of relief-at-source opportunities, mandatory tax reclamation, and full exemption from withholding under treaty or domestic law. Footnotes provide ready reference supporting the eligibility of treaty benefits.

With a subscription to the GWTR, you will have access to the EY global network which spans over 125 countries. Included within the subscription to the GWTR is consulting, at no additional charge, on issues covered within the scope of the GWTR. Questions posed to the GWTR team may be quickly resolved by phone or e-mail. If the issue is not considered within the scope of the GWTR, EY’s advisory services are available and a fee proposal may be obtained at your request.

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Assumptions

The analysis included in the GWTR is based on the following assumptions:

Definitions

This is not an exhaustive list for GWTR purposes.

Asset-backed securities

A security whose value and income payments are derived from and collateralized (or "backed") by a specified pool of underlying assets. The underlying assets may for instance comprise real estate assets, mortgages, and credit card receivables.

Common stock in private companies

Stock / shares issued by a company which are not listed and not traded through a recognized stock exchange or alternative investment market.

Convertible debt

Debt interests issued by a company that provide the holder with an option to convert into shares of common stock in the issuing company at an agreed-upon price. Convertible debt may either be publicly traded or privately issued.

Forwards

Contract traded on an over the counter (“OTC”) market which may or may not be in your country. Forwards are an agreement between two parties to buy or sell an asset at a certain future time at a pre-determined price.

Futures

Contract to buy or sell a specified commodity of standardized quality at a certain date in the future and at a market determined price. The contracts are traded on a futures exchange.

Government debt

Debt securities issued by government agencies that are traded in the bond markets. Examples are Government bonds, treasury notes, and sovereign debt.

Interest

Ordinary interest on borrowed funds which cannot be considered to be contingent on the performance of the debtor.

Preferred stock in private companies

Stock / shares issued by a company which are not listed and not traded through a recognized stock exchange or alternative investment market. The stock / shares entitle the holder to some priority over the holders of common stock / shares in the company, typically in respect of dividends.

Privately issued debt

Debt interests issued by a company to an identified lender or consortium of identified lenders.

Publicly traded debt

Debt securities issued by a company that are traded on a recognized exchange or traded in the bond markets. An example is corporate bonds.

Publicly traded stock

Stock / shares issued by a company which are quoted, listed and traded through a recognized stock exchange or alternative investment market.

Repo / repurchase contract

Transaction pursuant to which shares in a company are sold with an obligation to repurchase the shares at a future date at a fixed price. The contract would typically provide for certain payments (interest, manufactured payment) to be made between the parties to the transaction. By way of illustration:

An investment fund enters into a repurchase contract with a third party located in either New York or London. During the term of the contract, the company declares and pays a dividend to the third party. The investment fund repurchases the shares in the company at an agreed price that takes into account the amount of the dividend received by the third party.

Secondary debt acquired below par

Investment funds may acquire debt instruments at a discount to their face value. The analysis included in this section attempts to answer the tax accounting question of how income realized from such an investment will be classified for tax purposes. By way of illustration, consider the following example:

The investment fund acquires for $50 a corporate bond that has a face value of $100 and accrued interest of $15. The bond was originally issued for $100. The investment fund holds the bond for 6-12 months and then resells it for $70. The bond is sold prior to any of the accrued interest being paid. The investment fund makes profit of $20.

Short sale transaction

Transaction pursuant to which one party (the borrower) borrows securities from another party (the lender) and sells the borrowed securities in anticipation of a fall in the price of the relevant securities, thus creating a short position in the relevant securities. At an agreed future date, the borrower covers its short position by buying back the relevant securities and transferring the securities back to the lender. By way of illustration:

An investment fund instructs its broker to sell short 100 shares in company XYZ when its shares are trading at $50. The broker loans the investment fund 100 shares in company XYZ, either using its own inventory, the inventory of another client or by borrowing the shares from another broker. The shares are sold and $5,000 is raised for the account of the investment fund. Depending on the movement of the share price of company XYZ, the investment fund will at some stage in the future cover its short position with a profit or loss. For instance, if the share price of company XYZ were to fall to $40 and the investment fund covered its short position at that point, it would make a profit of $1,000 (before fees payable to the broker)..

Swap / total return swap

A contract between two parties pursuant to which payments are made based on the value increase / decrease of a particular asset (or asset class). It is not necessary for the parties to own the particular asset. By way of illustration: An investment fund enters into a swap agreement with a third party located in either New York or London. The purpose of entering into a swap is to obtain economic ownership of an asset without the need to acquire the legal ownership. If the value of the underlying assets changes, the investment fund either receives or makes a payment to the third party reflective of the change in value of the underlying asset. For GWTR purposes, the following conditions to the swap contract are assumed:

Countries Covered

The Global Withholding Tax Reporter is an essential tool for multi-national companies and for global custodians and international investment managers administering assets for:

The GWTR covers portfolio investment in 138 countries and for investors domiciled in 211 countries. The GWTR covers extensive content focused on global custodians and international investment managers. In moments, you can identify the lowest withholding rate across more than seven investment categories. For the countries listed below without an asterisk or with one asterisk, additional information is provided regarding the beneficial owner types covered (see paragraph, above, for details). This includes domestic law, treaty information (where applicable) and tax relief procedures.

The countries covered are:

* Currently covered as countries of investor only. Coverage is also limited to investments within certain countries and by certain beneficial owner types.

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Disclaimer

The Ernst & Young LLP Global Withholding Tax Reporter (“GWTR”) provides the global custodian/investment manager (“Customer”) with comprehensive and timely worldwide withholding tax and relief information. The Customer understands and agrees that the GWTR is provided as a library research, resource and information tool. The GWTR is not intended for use, and should not be used, in any actual business transaction without the advice and guidance of an appropriate professional tax advisor who is familiar with all relevant facts since some issues may be subject to differing interpretations; the information, approaches and concepts contained in the GWTR are subject to change without notice, notwithstanding the updates and revisions provided. In the event that Ernst & Young LLP receives actual knowledge that the GWTR contains information that Ernst & Young LLP, in its professional judgment deems incorrect, Ernst & Young LLP’s sole responsibility will be to use reasonable efforts to correct such information in the next update of the GWTR, if any. Except as otherwise expressly set forth herein, Ernst & Young LLP undertakes no legal or contractual obligation or responsibility to correct or change any error or omission in any materials resulting from a statutory, regulatory or judicial change in any jurisdiction. ERNST & YOUNG LLP SHALL NOT BE LIABLE FOR GENERAL, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OR LOST PROFITS ARISING OUT OF ANY USE OR INABILITY TO USE THE REPORTER ANY UPDATES THERETO OR ANY PORTION THEREOF, EVEN IF ERNST & YOUNG LLP HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR ANY CLAIMS RELATED THERETO. All use of the GWTR is subject to the terms and conditions of the License Agreement included with the GWTR.