HSBC 2001 Annual Report Download - page 273

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If the New Treaty enters into force, eligible US
holders will no longer be entitled to elect to receive
the benefits discussed above and will not be able to
claim a foreign tax credit in respect of any dividends
paid by HSBC. For this purpose, the New Treaty will
generally be effective for amounts credited on or after
the first day of the second month next following the
date on which instruments of ratifications are
exchanged by the United Kingdom and the United
States, except that such holders may elect to continue
to receive the special foreign tax credit benefits
described above for a 12-month period from the date
on which the New Treaty will otherwise enter into
effect if they elect to apply the Treaty in its entirety
for that period.
Taxation of capital gains
Gains realised by an eligible US holder on the sale or
other disposition of Shares or ADSs normally will not
be subject to UK taxation. Such gains will be included
in income for US tax purposes, and will be long-term
capital gains if the Shares or ADSs were held for more
than one year. A long-term capital gain realised by an
individual holder generally is subject to US tax at a
maximum rate of 20 per cent.
Stamp duty and stamp duty reserve tax –
ADSs
If Shares are transferred into a clearance service or
depositary receipt arrangement (which will include a
transfer of Shares to the Depositary) UK stamp duty
and/or stamp duty reserve tax will be payable. The
stamp duty or stamp duty reserve tax is generally
payable on the consideration for the transfer and is
payable at the aggregate rate of 1.5 per cent.
No stamp duty will be payable on the transfer of,
or agreement to transfer, an ADS, provided that the
ADR and any separate instrument of transfer or
written agreement to transfer remain at all times
outside the United Kingdom, and provided further
that any such transfer or written agreement to transfer
is not executed in the United Kingdom. No stamp duty
reserve tax will be payable on a transfer of, or
agreement to transfer, an ADS effected by the transfer
of an ADR.
On a transfer of Shares from the Depositary to a
registered holder of an ADS upon cancellation of the
ADS, a fixed stamp duty of £5 per instrument of
transfer will be payable by the registered holder of the
ADR cancelled.
US backup withholding tax and information
reporting
Distributions made on Shares and proceeds from the
sale of Shares or ADSs that are paid within the United
States, or through certain US-related financial
intermediaries to US holders, are subject to
information reporting and may be subject to a US
‘backup’ withholding tax unless, in general, the US
holder complies with certain certification procedures
or is a corporation or other person exempt from such
withholding. Holders that are not US persons
generally are not subject to information reporting or
backup withholding tax, but may be required to
comply with applicable certification procedures to
establish that they are not US persons in order to avoid
the application of such information reporting
requirements or backup withholding tax to payments
received within the United States or through certain
US-related financial intermediaries.