Tax

Yes, it is applicable, according to article 29 of the Capital Tax Code, the paying entity retains the rate of 10% of income and delivery to the state.

Is there withholding tax on interest payments under a loan?

Unless an exemption applies under domestic law or an applicable double tax treaty, where a payment of interest (as broadly defined) is paid (or is deemed to be paid) from Australia to offshore under a loan which is treated as debt for Australian tax purposes, the borrower is required to withhold and pay an amount equal to the applicable withholding tax rate to the ATO.

If so:
What is the rate of withholding?

The current rate of Australian interest withholding tax is 10%.

What are the key exemptions?

The more commonly relied on exemptions include:

• exemptions for a publicly offered syndicated loan facility or a publicly offered debenture issued by an Australian resident company or Australian unit trusts and by a company or unit trusts not resident in Australia but carrying on business at or through permanent establishments in Australia;
• exemptions for certain foreign tax exempt superannuation funds and foreign sovereign entities which do not have control or influence in certain Australian borrowers; and
• reliance on a double tax treaty (for example, an exemption is available for interest paid to government entities or independent financial institutions).

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Yes, the analysis described above is generally applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

Yes, Belgium levies withholding tax on interest payments under a loan.

If so:
What is the rate of withholding?

The current rate of Belgian withholding tax (ie the basic rate) is 30%.

What are the key exemptions?

Belgian domestic law provides for numerous withholding tax exemptions regarding interest payments. The following exemptions may be considered as key exemptions:

• the exemption for interest payments made between Belgian companies;
• the exemption for interest paid by Belgian resident professional investors to credit institutions established in the European Economic Area or in a country with which Belgium has concluded a double tax treaty; and
• reliance on the EU Interest and Royalties Directive as implemented by Belgian law.

A withholding tax exemption may also be obtained, in whole or in part, by virtue of double tax treaties concluded by Belgium.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

There are also withholding tax exemptions that specifically apply to interest payments under a debt security. For example, there is an exemption for interest paid by the issuer of Belgian registered bonds to 'non-resident savers' and interest paid on registered non-capitalization bonds and on securities cleared through the X/N clearing system (managed by the National Bank of Belgium).

Is there withholding tax on interest payments under a loan?

Interest paid under a loan transaction is subject to withholding tax in Brazil.

If so:
What is the rate of withholding?

For interest payments made under loans granted by Brazilian legal entities, withholding income tax applies at the following rates, which vary in accordance with the term of the loan agreement:

• 22.5% for loans with a maturity term of up to 180 days;
• 20% for loans with a maturity term of between 181 and 360 days;
• 17.5% for loans with a maturity term of between 361 and 720 days; and
• 15% for loans with a maturity term longer than 720 days.

Please note that the payment, credit or remittance of interest amounts outside of Brazil is subject to withholding income tax at a 15% rate, or at a 25% rate, if the lender is domiciled in low haven jurisdictions.

What are the key exemptions?

A 0% withholding income tax rate applies to interest amounts paid, credited, or remitted to recipients not resident in Brazil in connection with loan agreements entered into with the sole purpose of stimulating export transactions.

Under certain double tax treaties entered into by Brazil, a lower withholding tax rate applies to the payment, credit, or remittance of interest to a resident of the treaty partner country.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

In general, interest payments under debt securities are also subject to the same withholding income tax rules as described above.

Is there withholding tax on interest payments under a loan?

Canada does not impose withholding tax on interest payments under a loan from a Canadian resident lender unless the loan is part of a back-to-back loan arrangement. Generally, a back-to-back loan arrangement is one in which a third party (whether resident in Canada or not resident in Canada) is interposed between a Canadian borrower and a lender not resident in Canada in an attempt to avoid the application of withholding tax that would otherwise apply.

Canada does not impose withholding tax on interest payments under a loan from an arm’s length lender not resident in Canada unless either:

• the interest is 'participating debt interest'; or
• the loan is part of a back-to-back loan arrangement (as described above).

'Participating debt interest' is defined as interest that is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation.

Canadian withholding tax generally applies to interest payments to a non-arm’s length lender not resident in Canada.

If so:
What is the rate of withholding?

If applicable, the current rate of Canadian withholding tax on interest is 25%.

What are the key exemptions?

Where Canadian withholding tax does apply to interest payments, the primary exemption is under a double tax treaty (such treaty may only provide for partial exemption). For instance, under the Canada-United States tax treaty, interest paid to a non-arm’s length US resident lender is exempt from Canadian withholding tax. However, under the Canada-United Kingdom tax treaty, the withholding tax rate is 10% on interest paid to a non-arm’s length UK resident lender.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

Interest paid by borrowers resident in Chile to lenders not resident in Chile are subject to withholding tax in Chile. Repayments of loan principal are not subject to withholding tax.

If so:
What is the rate of withholding?

The withholding tax rate is generally 35%.

What are the key exemptions?

Interest paid to a lender not resident in Chile may benefit from a reduced withholding tax rate if:

• there is a double taxation treaty in force between Chile and the country of residence of the lender; or
• the interest payments are made to certain entities eg banks, financial institutions, insurance companies or pension funds.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Interest payments made under a loan from Colombian source income are subject to withholding tax. According to Colombian tax law, the source of interest income depends on the domicile of the debtor.

If so:
What is the rate of withholding?

The general withholding tax rate for interest payments made by a person resident for tax purposes in Colombia to a recipient who is not resident for tax purposes in Colombia, is 15%. This rate is increased to 34% (33% from 2018) when the recipient is resident for tax purposes in a country listed by Colombia as a non-cooperative or low tax jurisdiction.

What are the key exemptions?

Interest payments on loans granted by persons not resident for tax purposes in Colombia to Colombian banks, financial cooperatives, commercial finance companies, financial corporations, the Colombian Nation and territorial authorities, as well as certain government-owned finance agencies (Bancoldex, Finagro and Findeter), are not considered Colombian source income and are, therefore, not subject to withholding taxes or income taxes.

Interest payments arising from loans intended to finance public infrastructure projects in Colombia, and granted for a term equal to, or longer than, eight years, could be subject to a reduced 5% withholding tax rate.

The double tax treaties entered into by Colombia may allow for a reduction of the general withholding tax rate (normally to 10%), provided that the conditions set forth in the applicable treaty are complied with (such as the recipient being the effective beneficiary of the interest, and not a mere conduit entity).

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes. However, the Colombian Tax Administration recently changed a doctrine that has been in place since 2013, to accept an exception from withholding tax for interest payments on bonds and other debt securities issued outside of Colombia by a Colombian resident, provided the bonds or other debt securities are not traded on the Colombian markets. According to this new interpretation, there would not be withholding taxes in these cases.

Is there withholding tax on interest payments under a loan?

Yes, withholding tax is imposed on interest payments under a loan.

If so:
What is the rate of withholding?

The rate of withholding tax on interest payments to both lenders resident in the Czech Republic and lenders not resident in the Czech Republic is, generally, 15%. A higher rate of 35% is applicable in some cases where interest payments are made to certain lenders resident in jurisdictions outside of the EU or resident in countries that are not party to a double tax treaty with the Czech Republic.

What are the key exemptions?

Interest payments to banks or to other financial institutions resident in the Czech Republic are not subject to withholding tax.

An exemption from the application of withholding tax on interest payments may be applicable, in whole or in part, under the terms of a double tax treaty entered into by the Czech Republic with the country of residence of the lender, provided that the requisite conditions are met.

An exemption may also be available under the EU Interest and Royalties Directive, as implemented under the domestic law of the Czech Republic.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

No, but withholding tax can be levied in a few exceptional cases. These are very rare in practice. These exceptional cases include where interest is paid to a person who is not resident in Finland on:

• additional investments into Finnish funds;
• deposits into staff cash pools;
• deposits into co-operative cash pools;
• debt between private individuals where the creditor ceased to be resident for tax purposes in Finland after the debt arrangement was put in place; and
• debt which is recognized as a capital investment for tax purposes.

If so:
What is the rate of withholding?

In the exceptional cases where withholding tax applies, the rate of withholding tax is 20%, where the interest is paid to a company not resident in Finland, and 30% where the interest is paid to an individual not resident in Finland.

What are the key exemptions? 

An exemption from the application of withholding tax in the exceptional cases in which it applies may be available, in whole or in part, under the terms of a double tax treaty entered into by Finland, provided that the requisite conditions are met.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

As a general rule, no withholding tax is levied on French source interest payments, except in cases where:

• interest is paid to a beneficiary or to an account, located in a non-cooperative state or territory (NCST); or
• the interest payment is not deductible for the debtor by virtue of the application of the French rules which in some cases may limit the deduction of interest to the maximum legal interest rate provided for by Article 39.1.3° of the French tax code. In these cases, the non-deductible interest is reclassified as a deemed dividend  subject to dividend withholding tax.

If so:
What is the rate of withholding?

Interest paid under a loan by a French entity to a beneficiary located in a NCST or to an account located in a NCST may be subject to withholding tax at a rate of 75%, unless the recipient is able to prove that the payments do not have a tax avoidance motive.

The standard withholding tax rate on dividends is currently 30% (to be progressively reduced down to 25% in 2022). This rate applies to deemed dividends (see above). The rate may be reduced or the withholding tax eliminated under an applicable double tax treaty.

What are the key exemptions? 

There is generally no withholding tax on interest, except for the specific circumstances described above.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Provided that the borrower is not a bank or financial services provider, generally no withholding tax will be levied. Withholding tax may, however, apply in the case of a loan that qualifies as profit participating. Generally, a loan qualifies as profit participating if either the claim for interest generally, or its amount, depends on the profitability of the borrower's business or specific parts thereof.

If so:
What is the rate of withholding?

Where applicable, the rate of withholding is 25%.

What are the key exemptions? 

Most German double tax treaties allocate the taxing rights on interest to the contracting state in which the lender resides, which means that, in most cases, there is a full exemption from German withholding tax. Otherwise, most German double tax treaties limit Germany's taxing rights to a withholding tax rate of 10%.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan? 

Yes, withholding tax is payable on interest payments under a loan where the payment has a source in Ghana. 

If so: 
What is the rate of withholding? 

The rate of withholding is 1% in the case of interest paid to an individual, or 8% in every other case. 

What are the key exemptions?

Key exemptions are: 

• interest payments made by an individual, unless made in the course of business;
• interest paid to a resident financial institution; and
• where the payment is an exempt amount under the Income Tax Act, 2015 (Act 896), such as capital gains from the realization of securities traded on the stock exchange up to December 2021. 

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

The following are exempt from the payment of tax: 

• interest paid to individuals:
  • by resident financial institutions; and
  • on government bonds;
• interest paid to a holder of an investment in a unit trust; and
• interest paid to a non-resident on government bonds.

Is there withholding tax on interest payments under a loan?

No withholding tax applies on outbound interest payments made to a corporate entity which is not resident for tax purposes in Hungary, provided that the recipient does not have a permanent establishment in Hungary.

Interest payments made to an individual who is not resident for tax purposes in Hungary are, in general, subject to withholding tax in Hungary.

If so:
What is the rate of withholding?

Withholding tax is not applicable in the case of interest payments made to a corporate entity which is not resident for tax purposes in Hungary, provided that the recipient does not have a permanent establishment in Hungary.

In general, interest paid to an individual who is not resident for tax purposes in Hungary is subject to 15% withholding tax in Hungary.

What are the key exemptions? 

Withholding tax is not applicable in the case of interest payments made to a corporate entity which is not resident for tax purposes in Hungary, provided that the recipient does not have a permanent establishment in Hungary.

Relevant double tax treaty provisions may mitigate or provide protection against taxation of outbound interest payments in Hungary in the case of payments made to an individual who is not resident for tax purposes in Hungary.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Unless an exemption applies, where a payment of interest with an Irish source is paid under a loan which is intended or expected to have a duration of a year or more, an amount equal to the basic rate of the interest payment is required to be withheld and paid to the Irish Revenue Commissioners. The current rate of Irish interest withholding tax is 20%.

The most commonly relied on exemptions to ensure that interest payments made by Irish companies can be made free of Irish interest withholding tax include:

• the exemption for interest paid on an advance from a bona fide Irish tax resident bank (as defined in the legislation and including interest paid in respect of syndicated debt held by a bona fide Irish bank;
• where the interest is paid in the ordinary course of a trade or business carried on by an Irish corporate borrower to a company (1) which is regarded as being a resident of a relevant territory (i.e. a Member State of the European Union (other than Ireland) or a country (a) with which Ireland has a double taxation agreement in force or (b) with which Ireland has signed such a double taxation agreement which will come into force once all the ratification procedures have been completed) under local law and such territory imposes a tax that generally applies to interest receivable or (2) where the interest is exempt from tax under the double tax treaty or would be exempted from the charge to income tax under the relevant treaty which has been signed but not yet have the force of law on or before the date of payment on the interest, if such relevant Treaty had the force of law when the interest was paid tax (provided in both cases the interest is not paid to the recipient company in connection with a trade or business carried on by the recipient company in Ireland through a branch or agency);
• the exemption applicable to quoted Eurobonds (applicable to interest paid on a security which is quoted on a recognized stock exchange);
• payments to another company which advances money in the ordinary course of a trade and has made the required notifications to the Irish Revenue Commissioners;
• reliance on a double tax treaty; and
• reliance on the EU Interest and Royalties Directive (Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States) as implemented by Irish law (the key requirement being that the lender and the borrower meet the association requirement).

The analysis described above is applicable to both interest payments under a loan or other form of debt security. The quoted Eurobond exemption is particularly relevant to debt securities.

Is there withholding tax on interest payments under a loan?

Interest paid by an Italian resident borrower to an Italian resident lender (including an Italian permanent establishment of a non-resident entity) is not subject to withholding tax. In the case of lenders not resident in Italy, interest payments are subject to a final withholding tax.

If so:
What is the rate of withholding?

Domestic withholding tax on interest payments is applicable at 26%.

What are the key exemptions? 

Exemptions from withholding tax apply in the case of medium- and long-term loans when the interest is paid to:

• a bank or a financial institution authorized or licensed to carry out banking activities within the territory of Italy, and resident in Italy for tax purposes (and not acting through a permanent establishment located outside of Italy);
• a credit institution which is resident or established in an EU member state, and not acting through a permanent establishment located outside of the EU;
• an insurance company incorporated in and authorized under the laws of an EU member state; and
• an institutional investor not resident in Italy, but resident or established in a state or territory allowing for an adequate exchange of information, provided that it is subject to supervision in the respective jurisdiction of establishment.

An exemption from withholding tax may be applicable under the EU Interest and Royalties Directive as implemented in Italy.

An exemption may also be applicable under the double tax treaties entered into by Italy. However, double tax treaties signed between Italy and other EU countries usually only reduce the amount of withholding tax applicable to a 10% rate.

Some exemptions may also apply to interest on loans granted or guaranteed by public entities.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

In Ivory coast, withholding tax is applicable on interest payment under a loan.

If so:

What is the rate of withholding?

Foreign banks are subject to 18% tax on loan interest.

What are the key exemptions? For example, is there an exemption for interest payments to banks, to local lenders/debt security holders, on listed debt, to lenders/debt security holders entitled to the benefit of a double tax treaty etc.?

The exemptions listed by the Ivorian tax code are:

• some capital depreciation that are allowed after request;
• interest on amounts recorded in savings bank books;
• structures working in microfinance;
• current accounts;
• cooperatives;
• interest and loan issued by the State or the national investment bank;
• loans issued by the public treasury; and
• interest on loans from certain companies subject to income tax on movable capital.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

There is no withholding tax when persons resident in Japan (including a domestic corporation) receive interest payments under a loan.

Interest paid to persons not resident in Japan (including foreign corporations) is generally subject to withholding tax.

If so:
What is the rate of withholding?

The applicable withholding tax rate on interest paid to persons not resident in Japan (including foreign corporations) is 20.42%.

What are the key exemptions? 

Double taxation treaties entered into by Japan may provide exemption, in whole or in part, from withholding tax on interest payments.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

For a bond, the withholding tax rate on interest paid to persons not resident in Japan (including foreign corporations) is 15.315%. The double tax treaties that may apply to interest payments under a loan may also apply to interest payments under bonds.

Interest payments are not subject to withholding tax (WHT) in Luxembourg except in the following cases:

• Interest payments to a silent partner in proportion to the profit realized may be subject to a 15% WHT.
• Interest payments on profit sharing bonds may be subject to a 15% WHT.
• Interest payments can be requalified into dividends and are then subject to a 15% withholding tax where a Luxembourg company is over-indebted in light of thin capitalization rules or where a Luxembourg company does not comply with transfer pricing regulations.
• Interest payments made by Luxembourg resident paying agents to Luxembourg resident individuals are subject to a 20% WHT. There is an exemption from WHT if the amount due does not exceed €250.
• Where interest payments are made or credited by foreign paying agents located in a member state of the EU or in a state of the European Economic Area, the Luxembourg resident taxpayer may opt for a 20% WHT.

Is there withholding tax on interest payments under a loan? 

No. 

What are the key exemptions? For example, is there an exemption for interest payments to banks, to local lenders/debt security holders, on listed debt, to lenders/debt security holders entitled to the benefit of a double tax treaty? 

On interest payable by any person, other than by a bank or non-bank deposit taking institution, under the Banking Act, to any person, other than a company resident in Mauritius, a withholding tax of 15% will apply. 

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Yes, to the extent the interest is paid to a person who is not resident in Mexico. An expanded definition of interest applies for these purposes, which includes yields from all forms of credit, public debt, bonds or debentures. Interest payments between persons resident in Mexico are not subject to withholding taxes.

In addition, income deriving from the sale of a right to a receivable of any nature, whether present, future or contingent, by a person who is resident in Mexico to a person who is not resident in Mexico, is also taxed as interest. The amount of deemed interest income in the hands of the non-resident acquirer is determined as the difference between the nominal value of the receivable plus unpaid interest or returns that have not been subject to withholding tax, less the price paid on the sale. As such, the purchase of bad loans by a non-resident could be subject to withholding tax on the difference between the face value and the fair market value of the loans.

If so:
What is the rate of withholding?

The general Mexican withholding tax rate on interest paid to persons not resident in Mexico is 35% (with effect from 2014), unless an exception applies.

What are the key exemptions? 

The following types of interest payments are exempt from Mexican withholding tax:

• interest paid on loans to the Mexican Federal Government;
• interest paid on loans with a term of three or more years granted by financial entities resident outside of Mexico and registered with the Mexican tax authorities that are dedicated to the promotion of exports by the provision of special-term loans (thus, for example, to the extent assets and equipment produced outside of Mexico can be financed by way of an export credit loan, Mexican withholding tax may be avoided on the interest payable on the loans);
• interest derived from certain financial debt derivative transactions involving the sale of federal government securities; and
• interest derived from the sale of monetary regulation bonds issued by the Bank of Mexico.

The withholding tax rate is reduced to the following percentages in the following cases:

• 4.9% – interest paid to a financial entity resident outside of Mexico in which the Mexican Federal Government has an equity participation through the Ministry of Finance (SHCP) or the Mexican Central Bank (Banco de Mexico), provided that the financial entity is the effective beneficiary of the payment and meets certain registration requirements;
• 10% – interest paid to an entity that invests or places capital in Mexico that is derived from securities that are issued outside of Mexico to, and placed outside of Mexico with, the general public;
• 10% – interest paid to a person not resident in Mexico that derives from the sale of a right to a receivable, or that is paid to a person not resident in Mexico on certain types of securities, provided specific requirements are met;
• 10% – interest paid to banks, investment banks and certain limited purpose financial companies, in each case, resident outside of Mexico, that are the effective beneficiaries of the interest (To qualify for the reduced rate, the institution concerned must provide information to the borrower to document its status as a qualified institution. It should be noted that the use of back-to-back loan arrangements as a means of obtaining reduced withholding tax rates is not allowed under Mexican domestic law. The rate is reduced to 4.9% in the case of interest on loans paid to financial institutions resident in double tax treaty partner countries. The reduced rate of 4.9% is provided for through general regulations on an annual basis.);
• 4.9% – interest paid on publicly traded securities or securities issued through a recognized stock exchange in a country with which Mexico has entered into a double tax treaty, where the securities are registered with the National Registry of Securities and Intermediaries, and certain information requirements are met (if the information requirements are not met or the securities are issued through an exchange in a country with which Mexico does not have a double tax treaty, the rate is 10%);
• 15% – interest paid to a lessor not resident in Mexico with respect to a finance lease (In this case, the interest is considered to be Mexican-source when the leased asset is used in Mexico, or when the payments made to the non-resident lessor are deductible in whole or in part by a permanent establishment in Mexico, even when the payments are made through an establishment located outside of Mexico.); and
• 21%
  • interest payments made by credit institutions to persons not resident in Mexico, other than registered banks;
  • interest related to the sale on credit of machinery and equipment; and
  • interest in connection with loans to finance the acquisition, installation and commercialization of fixed assets, provided the loan terms are documented in the contract and payment is made to an entity registered with the tax authorities for this purpose.

Furthermore, there could be reduced withholding tax rates available on interest payments to persons not resident in Mexico who are entitled to apply a double tax treaty concluded by Mexico.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Credit institutions and similar bodies are permanently exempt from withholding tax on interest and other similar income. 

Is there withholding tax on interest payments under a loan?

No, there is no withholding tax on interest payments.

However, interest payments on hybrid loans are subject to withholding tax because hybrid loans are treated as equity. A loan is a hybrid loan if  for example (i) the amount of interest due depends on the profits of the debtor, (ii) the loan is subordinated to all other creditors, and (iii) the loan has no fixed maturity (or has a maturity of 50 years or longer). If these conditions are met, the interest payments made by the debtor are re-qualified as dividends for tax purposes and consequently subject to 15% dividend withholding tax

If so:
What is the rate of withholding?

N/A.

What are the key exemptions?

N/A.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Yes, generally New Zealand imposes withholding tax on interest payments under a loan.

If so:
What is the rate of withholding?

The rate of withholding varies.

For interest paid to recipients resident for tax purposes in New Zealand, the rate of resodent withholding tax (RWT) differs according to the type of recipient. For most corporates, the rate is 28% (or 33% if it chooses the higher rate), whereas individuals can elect a rate which reflects their marginal tax rate (10.5%, 17.5%, 30% or 33%). However, if the recipient (corporate or individual) has not provided its taxpayer identification (IRD) number to the payer, the rate defaults to 33%.

For interest paid to recipients not resident for tax purposes in New Zealand, the rate of non-resident withholding tax (NRWT) is 15% unless either:

• the approved issuer levy (AIL) regime has been applied to the loan and the requirements of the regime are met (including payment of a 2% or 0% levy), in which case NRWT is reduced to 0%; or
• a reduced rate applies under an applicable double tax treaty.

What are the key exemptions? 

The key exemptions from the requirement to deduct withholding tax from interest payments to recipients resident for tax purposes in New Zealand apply where the recipient holds a certificate of exemption (or, from 1 April 2020, has RWT-exempt status) – persons who may apply for a RWT exemption certificate (or, from 1 April 2020, RWT-exempt status) include registered banks, those in the business of borrowing and lending money, portfolio investment entities (a tax status for certain collective investment vehicles), certain large taxpayers (gross income in excess of NZD2 million), and certain persons deriving exempt income (e.g. charities).

The key exemptions from the requirement to deduct withholding tax from interest payments to recipients not resident for tax purposes in New Zealand apply where:

• the loan is under the AIL regime and the requirements of the regime have been met (including payment of the 2% levy or the loan is NZD dominated listed debt that qualifies for AIL at a rate of 0%), then NRWT is reduced to 0% (note: this is a reduction as opposed to an exemption);
• the interest is paid by a transitional resident and other requirements are met;
• the Commissioner of Inland Revenue has relieved the person of the obligation to withhold NRWT (although it is unlikely that this power would be exercised); or
• an applicable double tax agreement provides an exemption, in whole or in part.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

No. There is no withholding tax on interest payments.

If so:
What is the rate of withholding?

N/A.

What are the key exemptions? 

N/A.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

N/A.

Is there withholding tax on interest payments under a loan?

Yes. Withholding tax is generally applicable to Peruvian-source interest payments paid by a borrower resident in Peru to a lender which is a legal person not resident in Peru or an individual who is not domiciled in Peru. Such withholding tax applies not just to interest payments but also extends to commissions and any additional amount to the interest agreed in loans, credits or any capital placed or economically used in Peru.

If so:
What is the rate of withholding?

Lenders as legal persons

In the case of interest payments to legal persons (ie not individuals) not resident in Peru, the general withholding tax rate is 30%.

However, the rate of withholding may be reduced to a rate of 4.99%, if all of the following requirements are met:

• the interest rate is not higher than LIBOR + 7 points (the excess would be subject to a withholding rate of 30%);
• the entry of the loan capital into Peru is attested in documentation; and
• the financing operation is not performed between related parties (including by way of back-to-back transactions).

In addition, in the case of interest payments to financial institutions a rate of 4.99% will be applied.

Lenders as non-domiciled individuals

In the case of interests to individuals not domiciled in Peru, the general withholding tax rate applicable is also 30%.

However, the rate of withholding may also be reduced to 4.99%, if all of the following requirements are met:

• the financing operation is not performed between related parties (including by way of back-to-back transactions); and
• the interest payments are not derived from transactions made from or through tax havens.

What are the key exemptions? 

The main exemptions from withholding tax in Peru apply to interest and related payments made on:

• development loans granted directly or indirectly by international organizations or foreign government institutions; and
• government bonds.

An exemption from the application of withholding tax on interest or related payments may be applicable in part, under the terms of a double tax treaty entered into by Peru, provided that the requisite conditions are met.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

In principle interest paid under a loan to an entity which is not resident in Poland is subject to withholding tax.

Payments of interest to entities resident in Poland (but not individuals) are not subject to withholding tax.

If so:
What is the rate of withholding?

The general withholding tax rate on interest paid to entities which are not resident in Poland is 20%.

What are the key exemptions?

Interest payments to entities not resident in Poland may be exempt from withholding tax under the EU Interest and Royalties Directive as implemented under Polish law, provided that certain conditions are met. The withholding tax rate may be also reduced or eliminated based on relevant double tax treaty (DTT) concluded between Poland and the recipient’s country of residence under certain conditions. Under most DTTs the withholding tax rate is limited to 10% or 5%. Some DTTs provide for a 0% withholding tax rate. Moreover, a number of DTTs provide for exemption applicable to interest payable to banks.

However, the Polish withholding tax (WHT) regime has been substantially amended with the 2019 corporate income tax reform. Under the new rules, WHT becomes obligatory for certain cross-border payments (including interest). Even when a lower rate or an exemption is available, for example under a bilateral tax treaty entered into by Poland, the WHT has to be withheld in full by the withholding agent based on Polish domestic law and remitted to the relevant tax authority. The tax authority may provide a refund after it has verified the right of the non-resident taxpayer to benefit from a reduced rate or an exemption. There are also alternative procedures which may allow to mitigate WHT (a description of these procedures can be found here).

In principle, the changes affect cross-border payments exceeding PLN2 million annually paid to a non-resident taxpayer.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the comments outlined above are applicable to interest payments under a debt security (like bond). However, with respect to new obligatory WHT, such WHT regime is excluded in case of receivables received by non-residents due to interest or discount on bonds issued by the State Treasury/BGK and offered on foreign markets

Is there withholding tax on interest payments under a loan?

In general, interest payments with a Portuguese source are subject to withholding tax in Portugal.

If so:
What is the rate of withholding?

The general rate of withholding tax applicable to interest payments by corporate taxpayers is 25%.

What are the key exemptions?

The most commonly relied on exemptions to ensure that interest payments made by Portuguese companies can be made free of Portuguese withholding tax (in whole or in part) include:

• the exemption applicable to interest received by banks and financial institutions that are resident in Portugal and subject to corporate income tax;
• the exemption applicable to interest on shareholders' loans when the lender holds, directly or indirectly, more than 10% of the share capital with voting rights in the debtor company, provided the shareholding has been held continuously during the year preceding the interest payment;
• the reliance on a double tax treaty entered into by Portugal and the country of residence of the lender to obtain an exemption (in whole or in part) provided that the requisite conditions are met; and
• the reliance on the EU Interest and Royalties Directive as implemented by Portuguese domestic law, provided that the requisite conditions are met.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

Generally, there is no income tax withholding on interest payments made to any Puerto Rico entity. Similarly, there is no income tax withholding on interest payments made to a foreign entity, unless:

• the creditor is a foreign entity not engaged in a trade or business in Puerto Rico; and
• the debtor and creditor are ‘related persons’ under the Puerto Rico Internal Revenue Code of 2011, as amended.

If so:
What is the rate of withholding?

Where applicable, the rate of withholding is 29%.

What are the key exemptions?

As indicated above, interest payments made to any Puerto Rico entity are not subject to income tax withholding and interest payments made to a foreign entity are not subject to income tax withholding if the foreign entity is not a ‘related person’ with respect to the debtor. Other exemptions exist for interest paid to foreign entities that are otherwise ‘related persons’ for interest paid on bank deposits and interest paid by international banking entities. There are no tax treaties between Puerto Rico and other jurisdictions.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

As a general rule, interest paid by a Romanian resident to a beneficiary who is not a Romanian resident, is subject to withholding tax.

If so:
What is the rate of withholding?

The current rate of Romanian withholding tax is 16%.

What are the key exemptions?

There are specific exemptions from the application of withholding tax for the following types of interest payments:

• interest related to public debt instruments, in Romanian and foreign currency, as well as interest related to instruments issued by the National Bank of Romania for the purpose of achieving the objectives of monetary policies and revenues derived from trading of titles issued by the National Bank of Romania;
• interest related to instruments/titles issued by certain Romanian companies, if such instruments/titles are issued based on a prospectus approved by the relevant regulatory authority and the interest is paid to a person that is not an affiliated person of the issuer;
• interest paid to a related party resident in a member state of the EU, provided that the conditions of the EU Interest and Royalty Directive, as implemented in Romanian domestic legislation, are met; and
• interest paid to certain pension funds, provided that between Romania and the country of residence of the income beneficiaries there is a legal instrument based on which information exchange can be performed.

A reduction or elimination of applicable withholding tax may also be available under the provisions of a double tax treaty concluded between Romania and the country of residence of the recipient/beneficiary, provided that certain requirements are met.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, both withholding taxes and the applicable exemptions (if the debt security can be classified within the exemptions) are applicable.

Is there withholding tax on interest payments under a loan?

Withholding taxes are only applicable in the context of cross-border operations, ie in the context of Russian-source income (in particular, interest payments under a loan) paid by a Russian legal entity (RLE) to a foreign legal entity (FLE). Accordingly, tax should be withheld by an RLE paying interest to an FLE.

In relation to domestic loan transactions (ie loans between RLEs), no tax is required to be withheld. Corporate income tax is paid by the lender as part of its total taxable income on the earned interest income as per the standard procedure.

If so:
What is the rate of withholding?

Withholding is applied at the standard 20% corporate income tax rate on any interest income paid to a FLE.

What are the key exemptions?

The key reliefs and exemptions from withholding tax on interest income are as follows:

• a reduced rate of withholding for certain types of debt obligations (eg certain government securities, municipal securities and mortgage-backed securities);
• exemption or partial exemption under an applicable double tax treaty when interest income is paid to an FLE resident in a country that has concluded a treaty with Russia; and
• irrespective of the terms of a double tax treaty, certain interest payments are exempt from Russian withholding tax (eg interest income payable on certain government securities, municipal securities, and interest income which is paid by Russian organizations on marketable bonds issued in accordance with the legislation of foreign states).

As to application of the exemption under an applicable double tax treaty, the interest income’s recipient must be (i) the beneficial owner of the Russian-sourced income and (ii) a tax resident in the corresponding tax treaty country. In particular, the beneficial owner of income is defined as a person who by virtue of (a) having participation interest (directly and/or indirectly) in an organisation; or (b) control over an organisation; or (c) by virtue of other circumstances has the right to independently use and (or) dispose of such income.

The beneficial owner must provide to a Russian company (the “tax agent”) certain documents confirming the beneficial ownership status, given that the tax agent pays the Russian-sourced income and is therefore responsible for remitting withholding tax on this income. The tax agent must keep these documents and provide them to the Russian tax authorities when requested. However, neither Russian tax law nor clarifications from competent authorities indicate which documents constitute proof of beneficial ownership status.

The Federal Tax Service and the Ministry of Finance have defined a wide range of criteria which, from a beneficial ownership perspective, should be taken into account when determining a taxpayer’s entitlement to double tax treaty benefits. Therefore, a tax agent should analyze whether an FLE, which is a foreing recipient of Russian-source income is indeed the beneficial owner of such income based on such criteria, which are often differ from the OECD approaches.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Withholding taxes apply on interest paid under a loan to a destination abroad.

If so:

What is the rate of withholding?

The rate is 25% subject to Tax treaty signed by Senegal and 17% for the tax on financial activities.

For payment of interest on fixed term deposit, the rate is 16%.

What are the key exemptions? For example, is there an exemption for interest payments to banks, to local lenders/debt security holders, on listed debt, to lenders/debt security holders entitled to the benefit of a double tax treaty etc.?

Exemptions apply on:

• interest on loans, advances, deposits, as well as commissions on signature commitments and similar operations concluded or carried out between banks;
• interest on loans with a term of at least five years on the industrial, agricultural, fisheries or tourism sectors;
• interest on credit distribution operations carried out by the Decentralized Financial Systems;
• interest on loans and advances granted to the state;
• interest received on operations carried out with enterprises established in the Dakar industrial free zone;
• interest on loans granted to natural persons for the construction and acquisition of premises for the purpose of principal residence;
• 8% reduced rate on payment of interest on fixed term deposit paid through a bank account; and
• 7% reduced rate on interest, levied on all export sales financing transactions.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

The same analysis would apply to interest payments under a debt security.

Is there withholding tax on interest payments under a loan?

Withholding tax is applicable where a person is liable to pay another person (not known to such person to be resident in Singapore) any interest, commission, fee or any other payment in connection with any loan or indebtedness or in connection with any arrangement, management, guarantee, or service relating to any loan or indebtedness, if such payments are borne, directly or indirectly, by a person resident in Singapore or a Singapore permanent establishment of a person not resident in Singapore or if such payments are deductible against any income accruing in or derived from Singapore, unless exempted under applicable regulations.

If so:
What is the rate of withholding?

The applicable withholding tax rate for any interest, commission, fee or other payment in connection with any loan or indebtedness is 15%, if such income is derived by a person not resident in Singapore through operations carried on outside Singapore.

What are the key exemptions?

Payments made from 21 February 2014 onwards to a Singapore permanent establishment of a person not resident in Singapore, including Singapore branches of non-resident banks, are not subject to withholding tax.

Until 31 March 2021, specified entities such as banks licensed under the Banking Act or approved under the Monetary Authority of Singapore Act, finance companies licensed under the Finance Companies Act and certain other financial institutions do not need to withhold tax on any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which is made to persons not resident in Singapore (and without a permanent establishment in Singapore), where the payments are made for the purposes of the trade or business of such specified entities.

In addition, if the person receiving the income is a resident of a country which has entered into a double tax treaty with Singapore, the applicable double tax treaty may provide for a reduced withholding tax rate or an exemption.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

Is there withholding tax on interest payments under a loan?

Yes, withholding tax is imposed on interest payments under a loan.

If so:
What is the rate of withholding?

The rate of withholding tax in the case of interest payments by a taxpayer resident in the Slovak Republic to a taxpayer also resident in the Slovak Republic, is 19%.

In the case of interest payments paid to a taxpayer resident outside of the Slovak Republic but in a jurisdiction which has concluded a double tax treaty with the Slovak Republic, the withholding tax rate is 19% or such lower rate as may be stipulated in that double tax treaty, if applicable. In the case of interest payments paid to a taxpayer resident outside of the Slovak Republic in a non-contracting state (jurisdiction that has not concluded a double taxation treaty or an international treaty providing for the exchange of information for tax purposes with the Slovak Republic), the withholding tax rate is 35%.

What are the key exemptions?

Interest payments to banks or other lenders, in each case, resident in the Slovak Republic, are not subject to withholding tax.

An exemption may be applicable, in whole or in part, under a double tax treaty.

An exemption from withholding tax may also be applicable under the EU Interest and Royalties Directive, as implemented in the Slovak Republic, provided that certain conditions are met.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

There is no withholding tax levied on interest payments made to South African residents.

Interest payments made to, or for the benefit of, persons not resident in South Africa (which includes individuals and natural persons) are subject to withholding tax.

If so:
What is the rate of withholding?

The withholding tax rate is 15%.

What are the key exemptions?

An exemption may be available (in whole or in part) under a double tax treaty where applicable.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Withholding tax applies when a payment of interest with a Spanish source is paid under a loan.

If so:
What is the rate of withholding?

The current rate of Spanish withholding tax is 19%.

What are the key exemptions? 

The most commonly relied on exemptions to ensure that interest payments made by Spanish companies can be made free of Spanish withholding tax include:

• the exemption for interest paid to a bank resident for tax purposes in Spain;
• reliance on a double tax treaty (such treaty may provide for a total or partial exemption); or
• reliance on the EU Interest and Royalties Directive, as implemented under Spanish domestic law, provided that certain conditions are met (the key conditions being that the lender is resident for tax purposes in a member state of the EU and is not acting through a permanent establishment in Spain nor through a territory considered as a tax haven).

Would the same analysis apply to interest payments under a debt security (e.g., a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

There is no withholding tax on interest payments.

If so:
What is the rate of withholding?

N/A.

What are the key exemptions? 

N/A.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Yes, Thailand levies a withholding tax on interest payments under a loan. Profits earned from the sale of a bond or the redemption of bills are also subject to withholding tax.

If so:
What is the rate of withholding?

The current rate of withholding tax on loan interest in Thailand (i.e. the basic rate) is 1% where the lender is a legal entity residing in Thailand and 15% where the lender is a natural person residing in Thailand.

The current rate of withholding tax (i.e. the basic rate) applicable to a legal entity or a natural person residing outside Thailand is 15%.

What are the key exemptions? 

Exemptions from withholding tax on interest include those applicable to:

• payments of interest under a loan made by either a commercial bank, a finance company, a security company, a credit finance company or an asset management company regulated under Thai law (each a Finance Entity) or a legal entity of a Finance Entity and certain foundations or associations; and
• payments of interest to a payee resident in a country which has a double tax treaty with Thailand (such treaty may only provide for a partial exemption).

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

The applicable exemptions from withholding tax on interest payments under a debt security depend on the type of payer, for example:

• payments of interest, including, but not limited to, interest arising from bonds, deposits, debentures and bills issued, made or entered into by a Finance Entity or certain foundations or associations to another Finance Entity or certain foundations or associations, is exempt from withholding tax;
• payments of interest arising from bonds and debentures issued or entered into by a legal entity (which is not a Finance Entity) to any Finance Entity is subject to a reduced withholding tax rate of 1%; and
• payments of interest arising from bills issued by a legal entity (which is not a Finance Entity) to any legal entity (which is not a Finance Entity) is subject to a reduced withholding tax rate of 1%.

Is there withholding tax on interest payments under a loan?

Generally, Ukraine-source interest payable by Ukrainian corporate borrowers under loans provided by lenders not resident in Ukraine is subject to Ukrainian withholding tax.

Other payments (eg fees and commissions) under a loan agreement may not fall within the scope of Ukrainian withholding tax if they qualify as in return for services.

If so:
What is the rate of withholding?

The following tax rates apply to payments of interest by Ukrainian corporate borrowers under loans granted by lenders not resident in Ukraine:

• 15% – for loans provided by corporate lenders not resident in Ukraine; and
• 19.5% – for loans provided by individual lenders not resident in Ukraine.

What are the key exemptions? 

A full or partial exemption from Ukrainian withholding tax on interest payable by Ukrainian corporate borrowers may be granted under double tax treaties in force in Ukraine.

Special withholding tax rules apply to interest payable by Ukrainian corporate borrowers to corporate lenders not resident in Ukraine under loan agreements, where the funds advanced were obtained by corporate lenders not resident in Ukraine from the issue of debt securities on exchanges outside of Ukraine (eg Eurobonds or LPNs). Under these types of structures, the rate of Ukrainian withholding tax on interest under such loan agreements with corporate lenders not resident in Ukraine is:

• completely eliminated – for loans provided before 2018; or
• reduced to 5% – for loans provided after 2019.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the same analysis applies to interest payments under a debt security.

Is there withholding tax on interest payments under a loan?

Unless an exemption applies, where a payment of interest with a UK source is paid under a loan which is intended or expected to have a duration of a year or more, an amount equal to the basic rate of the interest payment is required to be withheld and paid to HM Revenue and Customs.

If so:
What is the rate of withholding?

The current rate of UK withholding tax (ie the basic rate) is 20%.

What are the key exemptions?

The most commonly relied on exemptions to ensure that interest payments made by UK companies can be made free of UK withholding tax include:

• the exemption for interest paid on an advance from a UK tax resident bank;
• the UK-to-UK exemption (applicable where interest is paid to a lender which is a UK tax resident company or a partnership of such companies);
• the quoted Eurobond exemption (applicable to interest paid on a security which is listed on a recognized stock exchange);
• reliance on a double tax treaty (such treaty may only provide for partial exemption);
• the qualifying private placement (the key requirement being the residence of the lender in a qualifying double tax treaty jurisdiction); or
• reliance on the EU Interest and Royalties Directive as implemented by UK law (the key requirement being that the lender and the borrower meet the association requirement).

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

The quoted Eurobond exemption is particularly relevant to debt securities.

Is there withholding tax on interest payments under a loan?

Unless an exemption applies, where a payment of interest with a UK source is paid under a loan which is intended or expected to have a duration of a year or more, an amount equal to the basic rate of the interest payment is required to be withheld and paid to HM Revenue and Customs.

If so:
What is the rate of withholding?

The current rate of UK withholding tax (ie the basic rate) is 20%.

What are the key exemptions?

The most commonly relied on exemptions to ensure that interest payments made by UK companies can be made free of UK withholding tax include:

• the exemption for interest paid on an advance from a UK tax resident bank;
• the UK-to-UK exemption (applicable where interest is paid to a lender which is a UK tax resident company or a partnership of such companies);
• the quoted Eurobond exemption (applicable to interest paid on a security which is listed on a recognized stock exchange);
• reliance on a double tax treaty (such treaty may only provide for partial exemption);
• the qualifying private placement (the key requirement being the residence of the lender in a qualifying double tax treaty jurisdiction); or
• reliance on the EU Interest and Royalties Directive as implemented by UK law (the key requirement being that the lender and the borrower meet the association requirement).

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes, the analysis described above is applicable to both interest payments under a loan or other form of debt security.

The quoted Eurobond exemption is particularly relevant to debt securities.

Is there withholding tax on interest payments under a loan?

No.

Would the same analysis apply to interest payments under a debt security (eg a bond)?

Yes.

Is there withholding tax on interest payments under a loan?

Federal taxes

Generally, withholding tax is imposed on payments of interest to persons not resident in the US. However, there are important exceptions often utilized as discussed below.

Interest payments to certain 'foreign financial institutions' or 'non-financial foreign entities' may also be subject to withholding under the Foreign Account Tax Compliance Act if the foreign financial institution fails to enter into an agreement with the IRS which meets certain requirements.

State and local taxes

Generally, there is no withholding on interest payments.

However, some states (e.g. California) may impose backup withholding on interest received on loans used in a trade or business conducted in the state unless a proper exemption certificate is provided. For California purposes, dividends, interests, and any financial institutions release of loan funds made in the normal course of business are exempt from backup withholding.

If so:
What is the rate of withholding?

The current rate of US federal tax withholding on interest paid to persons not resident in the US is 30%.

What are the key exemptions?

Federal taxes

The most commonly relied upon exemptions to ensure that interest paid by US companies to persons not resident in the US can be paid without any US withholding tax include:

• the portfolio interest exemption ((i) a non-US lender (which is unrelated to the US borrower, is not a bank, is not a 'controlled foreign corporation', and is not engaged in the conduct of a US trade or business), (ii) lends money to a US borrower pursuant to a registered debt instrument which pays a fixed rate of interest, and (iii) the non-US lender provides adequate documentation as to its non-US status);
• lending using commercial paper (original issue discount notes with terms of 183 days or less);
• qualification under a US tax treaty for no withholding or reduced withholding; or
• loans by a lender that engages in a trade or business in the US and that will report the interest as income effectively connected with that trade or business. However, any such effectively connected income is subject to US federal income taxation at regular graduated tax rates.

Would the same analysis apply to interest payments under a debt security (e.g. a bond)?

Federal taxes

The analysis described above is applicable to interest payments under both a loan and other forms of debt instruments; provided it is in registered form (for portfolio interest exemption purposes).