Are Unit Holders Compensated for Foreign Withholding Tax Risks?
Certain of the Bonds are subject to non-U.S. (“foreign”) withholding taxes. Certain issuers of Bonds which are subject to foreign withholding Page 15 taxes have generally agreed, subject to certain exceptions, to make additional payments (“Additional Payments”) which together with other payments are intended to compensate the holder of the Bond for the imposition of certain withholding taxes. However, both the calculation of the Additional Payment and whether the Additional Payment compensates the holder of the Bond for any related penalties, interest or other charges imposed in connection with any applicable foreign withholding taxes are likely to differ from Bond to Bond. Moreover, the Additional Payment is itself treated as taxable income to Unit holders for U.S. income tax purposes. The Additional Payment may not be based upon a “gross-up” formula which would otherwise compensate an investor for the tax liability triggered by the receipt of the Additional Payment. For any of these
