BT 2015 Annual Report Download - page 226

224 BT Group plc
Annual Report 2015
olders adusted ta basis deterined in U ollars in the ordinar
shares or ADSs. Such gain or loss generally will be US source gain or loss,
and will be treated as long-term capital gain or loss if the ordinary shares
have been held for more than one year at the time of disposition. Long-
term capital gains recognised by an individual US Holder generally are
subject to US federal income tax at preferential rates. The deductibility of
capital losses is subect to sinificant liitations.
A US Holder’s tax basis in an ordinary share will generally be its US Dollar
cost. The US Dollar cost of an ordinary share purchased with foreign
currency will generally be the US Dollar value of the purchase price on
the date of purchase, or the settlement date for the purchase, in the case
of ordinar shares traded on an established securities aret as defined
in the applicable Treasury Regulations, that are purchased by a cash basis
U older or an accrual basis U older that so elects. uch an election
by an accrual basis US Holder must be applied consistently from year to
year and cannot be revoked without the consent of the IRS. The amount
realised on a sale or other disposition of ordinary shares for an amount in
foreign currency will be the US Dollar value of this amount on the date of
sale or disposition. On the settlement date, the US Holder will recognise
U source forein currenc ain or loss taable as ordinar incoe or
loss eual to the dierence if an between the U ollar value of the
aount received based on the echane rates in eect on the date of
sale or other disposition and the settlement date. However, in the case
of ordinary shares traded on an established securities market that are
sold b a cash basis U older or an accrual basis U older that so
elects the aount realised will be based on the echane rate in eect
on the settlement date for the sale, and no exchange gain or loss will be
recognised at that time.
Passive foreign investment company status
 non-U corporation will be classified as a passive forein investent
copan for U federal incoe ta purposes a  for an taable ear
if at least 75% of its gross income consists of passive income or at least
50% of the average value of its assets consist of assets that produce, or
are held for the production of, passive income. BT currently believes that
it did not qualify as a PFIC for the tax year ended 31 March 2015. If BT
were to becoe a  for an ta ear U olders would suer adverse
tax consequences. These consequences may include having gains
realised on the disposition of ordinary shares or ADSs treated as ordinary
income rather than capital gains and being subject to punitive interest
charges on certain dividends and on the proceeds of the sale or other
disposition of the ordinary shares or ADSs. Furthermore, dividends paid
b  would not be ualified dividend incoe which a be eliible for
reduced rates of taxation as described above. US Holders should consult
their own tax advisers regarding the potential application of the PFIC
rules to BT.
US information reporting and backup withholding
Dividends paid on and proceeds received from the sale, exchange
or other disposition of ordinary shares or ADSs may be subject to
information reporting to the IRS and backup withholding at a current
rate of  which rate a be subect to chane. ertain eept
recipients such as corporations are not subect to these inforation
reporting requirements. Backup withholding will not apply, however, to
a U older who provides a correct tapaer identification nuber or
certificate of forein status and aes an other reuired certification
or who is otherwise exempt. Persons that are US persons for US federal
income tax purposes who are required to establish their exempt
status enerall ust furnish  or -9 euest for apaer
dentification uber and ertification. olders that are not U persons
for US federal income tax purposes generally will not be subject to US
information reporting or backup withholding. However, such holders
a be reuired to provide certification of non-U status in connection
with paents received in the U or throuh certain U-related financial
intermediaries.
Backup withholding is not an additional tax. Amounts withheld as
backup withholding may be credited against a holder’s US federal
income tax liability. A holder may obtain a refund of any excess amounts
withheld under the bacup withholdin rules b tiel filin the
appropriate claim for refund with the IRS and furnishing any required
information.
UK stamp duty
A transfer of or an agreement to transfer an ordinary share will generally
be subect to UK stap dut or UK stap dut reserve ta  at
0.5% of the amount or value of any consideration provided rounded
up in the case of stap dut to the nearest .  is enerall the
liability of the purchaser. It is customarily also the purchaser who pays
UK stamp duty. A transfer of an ordinary share to, or to a nominee for, a
person whose business is or includes the provision of clearance services
or to, or to a nominee or agent of, a person whose business is or includes
issuing depositary receipts gives rise to a 1.5% charge to stamp duty
or SDRT of either the amount of the consideration provided or the
value of the share issued rounded up in the case of stap dut to the
nearest £5. No UK stamp duty will be payable on the transfer of an
 assuin it is not reistered in the UK provided that the transfer
documents are executed and always retained outside the UK.
Transfers of ordinary shares into CREST will generally not be subject to
stamp duty or SDRT unless such a transfer is made for a consideration
in money or money’s worth, in which case a liability to SDRT will arise,
usually at the rate of 0.5% of the value of the consideration. Paperless
transfers of ordinary shares within CREST are generally liable to SDRT at
the rate of 0.5% of the value of the consideration. CREST is obliged to
collect SDRT from the purchaser of the shares on relevant transactions
settled within the system.
The above statements are intended as a general guide to the current
position. ertain cateories of person includin reconised aret
makers, brokers and dealers) may not be liable to stamp duty or SDRT or
may, although not liable for the tax, be required to notify and account
for it under the Stamp Duty Reserve Tax Regulations 1986.
UK inheritance and gift taxes in connection with ordinary
shares andor s
The rules and scope of domicile are complex and action should not
be taen without advice specific to the individuals circustances. 
lifetie ift or a transfer on death of ordinar shares andor s b an
individual holder who is U doiciled for the purposes of the UKU
state and ift a onvention and who is not a UK national as defined
in the Convention) will not generally be subject to UK inheritance tax
if the gift is subject to US federal gift or US estate tax unless the tax is
not paid otherwise than as a result of a specific eeption deduction
exclusion, credit or allowance).
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urin 011 certain of the roups non-U subsidiaries or other
non-US entities conducted limited activities in, or with persons from,
certain countries identified b the U epartent of tate as tate
Sponsors of Terrorism or otherwise subject to US sanctions. These
activities, which generally relate to the provision of communications
services to embassies and diplomatic missions of US-allied governments,
other CPs, news organisations, multinational corporations and other
customers that require global communications connectivity, are
insinificant to the roups financial condition and results of operations.
Under Section 219 of the Iran Threat Reduction and Syria Human Rights
ct of 01 which added ection 1 r to the ecurities chane ct
of 19 we are reuired to disclose whether  or an of its aliates
knowingly engaged in certain activities, transactions or dealings
relating to Iran or certain designated individuals or entities. Disclosure
is required even when the activities were conducted outside the US by
non-US entities and even when they were conducted in compliance with
applicable law. ur disclosures for 011 are below.
BT has a contract in place with Telecommunication Infrastructure
opan  to ae and receive voice calls from Iran to the UK. These
payments are subject to HM Treasury approval.
BT entered into a Framework Agreement with Rafsanjan Industrial
ople  for business consultanc services in a 010 and
provided an initial consultancy engagement under phase 1 of the
agreement. In February 2011, phase 2 was agreed with RIC however BT
stopped work in December 2011 due to the geopolitical situation. RIC
made an advance payment to BT of €384,120 to carry out the phase 2
work. We continue to explore whether the amount can be refunded.