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system when they are implemented. In April 2013, the Luxembourg Government announced its intention to abolish the
withholding system with effect from 1 January 2015, in favor of automatic information exchange under the Directive.
A number of non-EU countries and territories including Jersey and Switzerland have adopted similar measures (a
transitional withholding system in the case of Jersey, described more fully above and a withholding system in the case of
Switzerland).
The proposed financial transactions tax (FTT)
On 14 February 2013, the European Commission published a proposal (the Commission’s Proposal) for a Directive for a
common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the
participating Member States).
The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in Notes (including
secondary market transactions) in certain circumstances.
Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of
the participating Member States. Generally, it would apply to certain dealings in Notes where at least one party is a
financial institution, and at least one party is established in a participating Member State. A financial institution may be,
or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by
transacting with a person established in a participating Member State or (b) where the financial instrument which is
subject to the dealings is issued in a participating Member State.
A joint statement issued in May 2014 by ten of the eleven participating Member States indicated an intention to
implement the FTT progressively, such that it would initially apply to shares and certain derivatives, with this initial
implementation occurring by 1 January 2016. The FTT, as initially implemented on this basis, may not apply to dealings
in the Notes.
The FTT proposal remains subject to negotiation between the participating Member States. It may therefore be altered
prior to any implementation. Additional EU Member States may decide to participate.
Prospective holders of Notes are advised to seek their own professional advice in relation to the FTT.
Kuwait tax considerations
This summary of taxation in Kuwait is based on the Kuwait Income Tax Decree No. 3 of 1955 (the “
Decree
”), as
amended by Law No. 2 of 2008 "Amending Certain Provisions of Kuwait Income Tax Decree No. 3 of 1955" (the
“
Amendment
”), the Executive Bylaws of the Amendment (the “
Regulations
”), and various ministerial resolutions and
circulars relating thereto issued by the Ministry of Finance (the “
MOF
”) (together, the “
Taxation Laws
”) as interpreted
and implemented by the MOF's Department of Income Tax (“
DIT
”) as at the date of this Offering Memorandum. Any
subsequent changes in either the Taxation Laws or the interpretation or implementation of the same by the DIT would
alter and affect this summary.
Income tax
Under the Taxation Laws, income tax (at a flat rate of 15% is levied on, inter alia, the net income and capital gains
realised by any corporate entity (interpreted by the DIT to mean any form of company or partnership), wherever
incorporated, that conducts business in Kuwait. However, the DIT to date has granted a concession to such corporate
entities incorporated in Kuwait or in any other GCC country (being referred to in this Offering Memorandum as GCC
corporate entities) and has only imposed income tax on corporate entities which are not GCC corporate entities (being
referred to in this Offering Memorandum as non-GCC corporate entities) which, for the avoidance of doubt, includes
shareholders of GCC corporate entities which are themselves non-GCC corporate entities, in each case, conducting
business in Kuwait. The following paragraphs in this section are therefore applicable only to non-GCC corporate entities.
Pursuant to the Regulations, income generated from the lending of funds inside Kuwait is considered to be income
realised from the conducting of business in Kuwait, and is therefore subject to income tax.
As the Regulations have been implemented relatively recently, there has been no official statement made publicly by the
DIT regarding its interpretation of, and/or application of, the requirement described in the previous paragraph in the
context of a transaction such as the issue of the Notes, in particular where the issuer thereof is not incorporated in
Kuwait. Similarly, the Kuwaiti courts (who will be the final arbiters on the matter) have not been required to interpret
such requirement to date.
