The Global Master Securities Lending Agreement (GMSLA) is a widely used document that governs the lending and borrowing of securities worldwide. The purpose of the GMSLA is to establish standard terms and conditions for securities lending transactions, which helps to facilitate a more efficient and transparent global marketplace.
In 2014, the International Securities Lending Association (ISLA) released an updated version of the GMSLA, which included a new addendum specifically for US tax considerations. This addendum is designed to ensure compliance with US tax laws, as well as to clarify certain tax implications that may arise in securities lending transactions.
The US tax addendum to the GMSLA covers a range of topics, including withholding taxes, tax documentation, and the treatment of dividends and other payments. For example, the addendum clarifies that the lender of a US security is generally required to withhold tax on certain payments made to non-US borrowers, unless an exemption or reduced rate applies.
Additionally, the addendum includes provisions related to the Foreign Account Tax Compliance Act (FATCA), a US law that requires foreign financial institutions to report certain information about their US account holders. Under the GMSLA, borrowers are required to comply with FATCA and provide necessary information and documentation to lenders to ensure compliance.
Overall, the US tax addendum to the GMSLA is an important tool for ensuring compliance with US tax laws in securities lending transactions. By providing standard terms and conditions for tax considerations, the addendum helps to reduce uncertainty and streamline the securities lending process. As such, it is a valuable resource for any market participant engaged in securities lending activities.