Vodafone 2011 Annual Report Download - page 139

Vodafone Group Plc Annual Report 2011 137
Additional information
This section is further based in part upon the representations of the
depositary and assumes that each obligation in the deposit agreement and
any related agreement will be performed in accordance with its terms.
Based on this assumption, for purposes of the treaty and the US-UK double
taxation convention relating to estate and gift taxes (the ‘Estate Tax
Convention’), and for US federal income tax and UK tax purposes, a holder of
ADRs evidencing ADSs will be treated as the owner of the shares in the
Company represented by those ADSs. Generally exchanges of shares for
ADRs and ADRs for shares will not be subject to US federal income tax or to
UK tax other than stamp duty or stamp duty reserve tax (see the section on
these taxes below).
Taxation of dividends
UK taxation
Under current UK tax law no withholding tax will be deducted from the
dividends we pay. Shareholders who are within the charge to UK corporation
tax will be subject to corporation tax on the dividends we pay unless the
dividends fall within an exempt class and certain other conditions are met.
It is expected that the dividends we pay would generally be exempt.
A shareholder in the Company who is an individual resident for UK tax
purposes in the United Kingdom is entitled, in calculating their liability to UK
income tax, to a tax credit on cash dividends we pay on our shares or ADSs
and the tax credit is equal to one-ninth of the cash dividend.
US federal income taxation
Subject to the PFIC rules described below, a US holder is subject to US federal
income taxation on the gross amount of any dividend we pay out of our
current or accumulated earnings and profits (as determined for US federal
income tax purposes). Dividends paid to a non-corporate US holder in tax
years beginning before 1 January 2013 that constitute qualified dividend
income will be taxable to the holder at a maximum tax rate of 15% provided
that the ordinary shares or ADSs are held for more than 60 days during the
121 day period beginning 60 days before the ex-dividend date and the
holder meets other holding period requirements. Dividends paid by us with
respect to the shares or ADSs will generally be qualified dividend income.
A US holder is not subject to a UK withholding tax. The US holder includes in
gross income for US federal income tax purposes only the amount of the
dividend actually received from us and the receipt of a dividend does not
entitle the US holder to a foreign tax credit.
Dividends must be included in income when the US holder, in the case of
shares, or the depositary, in the case of ADSs, actually or constructively
receives the dividend and will not be eligible for the dividends-received
deduction generally allowed to US corporations in respect of dividends
received from other US corporations. Dividends will be income from sources
outside the United States. For the purpose of the foreign tax credit limitation,
foreign source income is classified in one or two baskets and the credit for
foreign taxes on income in any basket is limited to US federal income tax
allocable to that income. Generally the dividends we pay will constitute
foreign source income in the passive income basket.
In the case of shares, the amount of the dividend distribution to be included
in income will be the US dollar value of the pound sterling payments made
determined at the spot pound sterling/US dollar rate on the date of the
dividend distribution regardless of whether the payment is in fact converted
into US dollars. Generally any gain or loss resulting from currency exchange
fluctuations during the period from the date the dividend payment is to be
included in income to the date the payment is converted into US dollars will
be treated as ordinary income or loss. Generally the gain or loss will be
income or loss from sources within the United States for foreign tax credit
limitation purposes.
Documents on display
The Company is subject to the information requirements of the Exchange
Act applicable to foreign private issuers. In accordance with these
requirements the Company files its annual report on Form 20-F and other
related documents with the SEC. These documents may be inspected at the
SEC’s public reference rooms located at 100 F Street, NE Washington,
DC 20549. Information on the operation of the public reference room can
be obtained in the US by calling the SEC on +1-800-SEC-0330. In addition,
some of the Company’s SEC filings, including all those filed on or after
4 November 2002, are available on the SEC’s website (www.sec.gov).
Shareholders can also obtain copies of the Company’s articles of association
from our website at www.vodafone.com/governance or from the Company’s
registered office.
Material contracts
At the date of this annual report the Group is not party to any contracts that
are considered material to the Group’s results or operations except for its
US$4.2 billion and €4.2 billion credit facilities which are discussed under
“Financial position and resources” on page 50.
Exchange controls
There are no UK government laws, decrees or regulations that restrict or
affect the export or import of capital, including but not limited to, foreign
exchange controls on remittance of dividends on the ordinary shares or on
the conduct of the Group’s operations.
Taxation
As this is a complex area investors should consult their own tax advisor
regarding the US federal, state and local, the UK and other tax consequences
of owning and disposing of shares and ADSs in their particular circumstances.
This section describes, primarily for a US holder (as defined below), in general
terms, the principal US federal income tax and UK tax consequences of
owning or disposing of shares or ADSs in the Company held as capital assets
(for US and UK tax purposes). This section does not, however, cover the tax
consequences for members of certain classes of holders subject to special
rules including officers of the Company, employees and holders that, directly
or indirectly, hold 10% or more of the Company’s voting stock.
A US holder is a beneficial owner of shares or ADSs that is for US federal
income tax purposes:
■a citizen or resident of the US;
■a US domestic corporation;
■an estate, the income of which is subject to US federal income tax
regardless of its source; or
■a trust, if a US court can exercise primary supervision over the trust’s
administration and one or more US persons are authorised to control all
substantial decisions of the trust.
If a partnership holds the shares or ADSs, the US federal income tax
treatment of a partner will generally depend on the status of the partner and
the tax treatment of the partnership. A partner in a partnership holding the
shares or ADSs should consult its tax advisor with regard to the US federal
income tax treatment of an investment in the shares or ADSs.
This section is based on the US Internal Revenue Code of 1986, as amended,
its legislative history, existing and proposed regulations thereunder,
published rulings and court decisions, and on the tax laws of the United
Kingdom and the Double Taxation Convention between the United States
and the United Kingdom (the ‘treaty’), all as currently in effect. These laws
are subject to change, possibly on a retroactive basis.