IIG Prospectus - London Stock Exchange

Issuer will be required to pay an annual exempt company charge which is currently £600 in respectof each subsequent calendar year during which it wishes to continue to have exempt companystatus. The retention of exempt company status is conditional upon the Comptroller of Income Taxbeing satisfied that no Jersey resident has a beneficial interest in the Trustee, except as permittedby concessions granted by the Comptroller of Income Tax, and disclosure of beneficial ownershipbeing made to the Jersey Financial Services Commission. As an exempt company, the Issuer will notbe liable to Jersey income tax on income received in its own right, other than on Jersey sourceincome (except, by concession, bank deposit interest on Jersey bank accounts).Under current Jersey law, there are no death or estate duties, capital gains, gift, wealth,inheritance or capital transfer taxes. No stamp duty is levied in Jersey on the issue or transfer ofCertificates. In the event of the death of an individual sole Certificateholder, duty at a rate of up to0.75 per cent. of the value of the Certificates held may be payable on the registration of Jerseyprobate or letters of administration which may be required in order to transfer or otherwise dealwith Certificates held by the deceased individual sole Certificateholder.Jersey is not part of the European Union (‘‘EU’’) nor is it subject to the EU Savings TaxDirective. However, in keeping with its policy of constructive international engagement the Statesof Jersey has introduced a retention tax system in respect of payments of interest (or other similarincome) made to an individual beneficial owner resident in a Member State by a paying agentsituated in Jersey (the terms ‘‘beneficial owner’’ and ‘‘paying agent’’ are defined in the EU SavingsTax Directive). The retention tax system will apply for a transitional period prior to theimplementation of a system of automatic communication of information regarding such paymentsto Member States of information regarding such payments. The transitional period will end onlyafter all Member States apply the automatic exchange of information and the Member Statesunanimously agree that the United States of America has committed to exchange of information onrequest.During this transitional period, an individual beneficial owner resident in a Member State willbe entitled to request a paying agent not to retain tax from such payments but instead to apply asystem by which the details of such payments are communicated to the tax authorities of theMember State in which the beneficial owner is resident.Under the implementation of the retention tax system in Jersey the Issuer will not be obligedto levy retention tax in respect of Periodic Distribution Amount payments made to a paying agentsituated outside Jersey.On 3 June 2003, the European Union Council of Economics and Finance Ministers reachedpolitical agreement on certain issue relating to its Code of Conduct on Business Taxation (the‘‘Code’’). Jersey is not a member of the EU, however, the Policy and Resources Committee of theStates of Jersey has announced that, in keeping with Jersey’s policy of constructive internationalengagement, it intends to propose legislation to replace the Jersey exempt company regime by2008 with a general zero rate of corporate tax.EU Directive on the Taxation of Savings IncomeUnder EC Council Directive 2003/48/EC on the taxation of savings income, each MemberState has been required, since 1 July 2005, to provide to the tax authorities of another MemberState details of payments of interest (or similar income) paid by a person within its jurisdiction to,or collected by such a person for, an individual resident in that other Member State. However,Austria, Belgium and Luxembourg are required instead to apply a withholding system for atransitional period in relation to such payments by deducting amounts on account of tax at ratesrising over time to 35 per cent. This transitional period commenced on 1 July 2005 and terminatesat the end of the first full fiscal year following agreement by certain non-EU countries andterritories to the exchange of information relating to payments of interest. A number of non-EUcountries and territories, including Switzerland, have agreed to adopt similar measures (awithholding system in the case of Switzerland) with effect from the same date. Therefore,payments of Periodic Distribution Amounts on the Certificates which are made or collected throughBelgium, Luxembourg, Austria or any other relevant country may be subject to withholding taxwhich would prevent Certificateholders from receiving Periodic Distribution Amounts on theirCertificate in full. The terms and conditions of the Certificates provide that, to the extent that it ispossible to do so, a paying agent will be maintained by the Issuer in a Member State that is notrequired to withhold tax pursuant to the directive.123