Withholding tax on interest on corporate debt
This table sets out a summary of the key information concerning the withholding tax requirement on interest on corporate debt for each of the 11 jurisdictions covered in the country Q&A section under the Tax on Finance Transactions headings.
What is the withholding tax requirement on interest on corporate debt?
What are the key exemptions (ignoring double tax treaties)?
What is the rate?
Withholding tax applies to:
The following are fully exempt:
Interest paid by a French debtor to a non-French tax resident is subject to French withholding tax.
An exemption is available for French companies borrowing from non-French lenders if certain conditions are met (Article 131 quater, FTC).
An exemption is available to EU companies subject to corporate tax and meeting conditions of shareholdings, subject to anti-avoidance provisions (EU Interest and Royalties Directive (2003/49/EC)).
There is generally no withholding tax requirement on ordinary corporate debt.
Withholding tax is due on:
Withholding tax must be paid on interest on loans paid to a non-Japanese resident or a foreign corporation.
Exemptions exist for:
Withholding tax must be paid on interest on bonds paid to a Japanese resident or a Japanese corporation.
Exemptions exist for:
Withholding tax must be paid on interest on bonds paid to a non-Japanese resident or a foreign corporation.
An exemption exists for interest on a corporate bond issued outside Japan by a Japanese company that is paid to a foreign corporation, as long as such interest is paid outside Japan.
Interest paid to non-resident related parties is subject to withholding tax.
Interest paid to third parties is not subject to withholding tax.
10% or 5% for banks (from 1 July 2009 the rate is reduced to 5%, and from 1 July 2013 it will be eliminated for qualifying EU companies).
There is no withholding tax on domestic or cross-border interest payments to companies. The same applies to other payments under a loan.
Interest that a Russian borrower pays (including income from bonds) to a foreign lender is subject to withholding tax. No withholding tax applies on interest payable by one Russian company to another.
There are generally no exemptions, but lower rates are available for income from:
General rate: 20%.
Income from certain mortgage-backed bonds: 15% and 9%.
Income from hard currency denominated state and municipal bonds issued in 1999 and some other state and municipal bonds issued on or before 20 January 1997: 0%.
The Singapore payer must withhold tax on interest and other payments relating to loans or indebtedness to non-residents.
Payment made to a Singapore branch of a non-resident bank, where the Singapore branch has been granted waiver from compliance with Singapore withholding tax by IRAS.
Interest paid to a non-resident for a loan obtained from outside Singapore for acquiring an overseas immovable property.
Interest paid on interbank and interbranch transactions by approved banks in Singapore. An approved bank need not withhold tax when paying interest to its branches, head office, or to another bank outside Singapore, whether the recipient bank has any permanent establishment in Singapore.
15% unless interest is connected with the non-resident's permanent establishment, in which case it will be taxed at 17%.
UK (England and Wales)
Tax must be withheld on annual interest with a UK source.
There are various exemptions, including interest paid:
Tax must be withheld from payments to foreign persons of US source interest and original issue discount when a debt obligation is redeemed or transferred, unless an exemption applies.
The most important exemptions are for: