Base Prospectus - Malta Financial Services Authority

Final Terms. Prospective purchasers are advised to consult their tax advisers as to the proper
treatment of such Notes.
Further Notes
A U.S. Holder must recognise OID on Further Notes (as defined in Condition 17 of the Notes)
issued at a discount unless the Further Notes are part of the same issue as the original Notes for
U.S. federal income tax purposes. Further Notes will be part of the same issue for U.S. federal
income tax purposes if (i) they are issued within six months of the original Notes when the yield on
the original Notes is no more than 110 per cent. of their original yield or (ii) they are issued at a
de minimis discount from par. A discount is de minimis if it is less than 0.25 per cent. multiplied by
the number of complete years remaining to the maturity of the Further Notes. A U.S. Holder must
accrue OID into income at a constant yield to maturity whether or not it receives cash payments
on the Notes.
Further Notes that are part of the same issue as the original Notes may have market
discount or acquisition premium. Further Notes will have market discount if the holder purchases
them at a discount from par at least equal to 0.25 per cent. multiplied by the number of complete
years remaining to maturity. Further Notes will have acquisition premium if the holder purchases
them for more than par. If a U.S. Holder acquires Further Notes at a market discount, the holder’s
deductions for certain interest on debt incurred or continued to purchase or carry the Notes may
be deferred and partial principal repayments or gain on disposition of the Notes will be ordinary
income to the extent of accrued market discount. A holder may avoid those consequences by
electing to take market discount into income as it accrues. If a U.S. Holder acquires Further Notes
with acquisition premium, the holder may elect to reduce the amount of interest recognised on the
Notes each year by the premium allocable to the year. Elections to accrue market discount and to
amortise acquisition premium generally will apply to all of the holder’s Notes that have market
discount or acquisition premium.
Sale, Exchange and Retirement of Notes
Upon the sale, exchange, retirement or other taxable disposition of a Note, a U.S. Holder
generally will recognise capital gain or loss equal to the difference between the amount realised
upon the sale, exchange, retirement or other taxable disposition (less any amount attributable to
accrued interest, which will be taxed as such) and the adjusted tax basis of the Note. A U.S.
Holder’s tax basis in the Note will, in general, be the U.S. Holder’s cost therefor, decreased by any
amortised bond premium and by any payments received on the Note other than qualified stated
interest and increased by any OID previously included in income by the U.S. Holder. For purposes
of the U.S. foreign tax credit limitations, capital gain realised with respect to a Note generally will
be treated as U.S. source gain, although a loss realised with respect to a Note may be treated as
a foreign source loss. In the case of a U.S. Holder that is an individual, estate or trust, the
maximum marginal federal income tax rate applicable to such capital gain is currently lower than
the maximum marginal federal income tax rate applicable to ordinary income if the Notes are held
for more than one year. The deductibility of capital losses is subject to limitations.
Gain or loss realised upon the sale, exchange, retirement or other taxable disposition of a
Non-U.S. Dollar Note which is attributable to fluctuations in currency exchange rates will be treated
as ordinary income or loss. Gain or loss attributable to fluctuations in exchange rates will be
calculated by multiplying the original purchase price paid by the U.S. Holder (expressed in the
relevant foreign currency) by the change in the relevant exchange rate (expressed in dollars per
unit of the relevant foreign currency) between the date on which the U.S. Holder acquired the Non-
U.S. Dollar Note (or, in the case of Notes traded on an established securities market, as defined in
the applicable Treasury Regulations, that are purchased by a cash basis U.S. Holder, or an
accrual basis U.S. Holder that so elects, on the settlement date for the purchase) and the date on
which the U.S. Holder received payment in respect of the sale, exchange, retirement or other
taxable disposition of the Non-U.S. Dollar Note (or, in the case of Notes traded on an established
securities market, as defined in the applicable Treasury Regulations, that are purchased by a cash
basis U.S. Holder, or an accrual basis U.S. Holder that so elects, on the settlement date for the
sale). Such foreign currency gain or loss will be recognised only to the extent of the total gain or
loss realised by a U.S. Holder on the sale, exchange, retirement or other taxable disposition of the
Non-U.S. Dollar Note.
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