BP 2010 Annual Report Download - page 138
Download and view the complete annual report
Please find page 138 of the 2010 BP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Additionalinformationforshareholders
AsnotedaboveinUKtaxation,aUSholderwillnotbesubjecttoUK
withholdingtax.AUSholderwillincludeingrossincomeforUSfederal
incometaxpurposestheamountofthedividendactuallyreceivedfromthe
companyandthereceiptofadividendwillnotentitletheUSholdertoa
foreigntaxcredit.
ForUSfederalincometaxpurposes,adividendmustbeincludedin
incomewhentheUSholder,inthecaseofordinaryshares,orthe
Depositary,inthecaseofADSs,actuallyorconstructivelyreceivesthe
dividend,andwillnotbeeligibleforthedividends-receiveddeduction
generallyallowedtoUScorporationsinrespectofdividendsreceivedfrom
otherUScorporations.Dividendswillbeincomefromsourcesoutside
theUS,andgenerallywillbe‘passivecategoryincome’or,inthecase
ofcertainUSholders,‘generalcategoryincome’,eachofwhichis
treatedseparatelyforpurposesofcomputingaUSholder’sforeign
taxcreditlimitation.
Theamountofthedividenddistributionontheordinarysharesor
ADSsthatispaidinpoundssterlingwillbetheUSdollarvalueofthe
poundssterlingpaymentsmade,determinedatthespotpoundssterling/
USdollarrateonthedatethedividenddistributionisincludibleinincome,
regardlessofwhetherthepaymentis,infact,convertedintoUSdollars.
Generally,anygainorlossresultingfromcurrencyexchangeuctuations
duringtheperiodfromthedatethepoundssterlingdividendpaymentis
includibleinincometothedatethepaymentisconvertedintoUSdollars
willbetreatedasordinaryincomeorlossandwillnotbeeligibleforthe
15%taxrateonqualieddividendincome.Thegainorlossgenerallywill
beincomeorlossfromsourceswithintheUSforforeigntaxcredit
limitationpurposes.
Distributionsinexcessofthecompany’searningsandprots,as
determinedforUSfederalincometaxpurposes,willbetreatedasareturn
ofcapitaltotheextentoftheUSholder’sbasisintheordinarysharesor
ADSsandthereafterascapitalgain,subjecttotaxationasdescribedin
Taxationofcapitalgains–USfederalincometaxation.
Inaddition,thetaxationofdividendsmaybesubjecttotherulesfor
passiveforeigninvestmentcompanies(PFIC),describedbelowunder
‘Taxationofcapitalgains–USfederalincometaxation’.Distributionsmade
byaPFICdonotconstitutequalieddividendincomeandarenoteligible
forthe15%taxrate.
Taxation of capital gains
UKtaxation
AUSholdermaybeliableforbothUKandUStaxinrespectofagainon
thedisposalofordinarysharesorADSsiftheUSholderis(i)acitizenofthe
USresidentorordinarilyresidentintheUK,(ii)aUSdomesticcorporation
residentintheUKbyreasonofitsbusinessbeingmanagedorcontrolledin
theUKor(iii)acitizenoftheUSoracorporationthatcarriesonatradeor
professionorvocationintheUKthroughabranchoragencyor,inrespect
ofcorporationsforaccountingperiodsbeginningonorafter1January
2003,throughapermanentestablishment,andthathaveused,held,or
acquiredtheordinarysharesorADSsforthepurposesofsuchtrade,
professionorvocationofsuchbranch,agencyorpermanentestablishment.
However,suchpersonsmaybeentitledtoataxcreditagainsttheirUS
federalincometaxliabilityfortheamountofUKcapitalgainstaxorUK
corporationtaxonchargeablegains(asthecasemaybe)thatispaidin
respectofsuchgain.
UndertheTreaty,capitalgainsondispositionsofordinarysharesor
ADSsgenerallywillbesubjecttotaxonlyinthejurisdictionofresidenceof
therelevantholderasdeterminedunderboththelawsoftheUKandthe
USandasrequiredbythetermsoftheTreaty.
UndertheTreaty,individualswhoareresidentsofeithertheUKortheUS
andwhohavebeenresidentsoftheotherjurisdiction(theUSortheUK,as
thecasemaybe)atanytimeduringthesixyearsimmediatelypreceding
therelevantdisposalofordinarysharesorADSsmaybesubjecttotaxwith
respecttocapitalgainsarisingfromadispositionofordinarysharesor
ADSsofthecompanynotonlyinthejurisdictionofwhichtheholderis
residentatthetimeofthedispositionbutalsointheotherjurisdiction.
USfederalincometaxation
AUSholderwhosellsorotherwisedisposesofordinarysharesorADSs
willrecognizeacapitalgainorlossforUSfederalincometaxpurposes
equaltothedifferencebetweentheUSdollarvalueoftheamountrealized
andtheholder’staxbasis,determinedinUSdollars,intheordinaryshares
orADSs.Capitalgainofanon-corporateUSholderthatisrecognizedin
taxableyearsbeginningbefore1January2013isgenerallytaxedata
maximumrateof15%iftheholder’sholdingperiodforsuchordinary
sharesorADSsexceedsoneyear.Thegainorlosswillgenerallybeincome
orlossfromsourceswithintheUSforforeigntaxcreditlimitation
purposes.Thedeductibilityofcapitallossesissubjecttolimitations.
WedonotbelievethatordinarysharesorADSswillbetreatedas
stockofapassiveforeigninvestmentcompany,orPFIC,forUSfederal
incometaxpurposes,butthisconclusionisafactualdeterminationthatis
madeannuallyandthusissubjecttochange.IfwearetreatedasaPFIC,
unlessaUSholderelectstobetaxedannuallyonamark-to-marketbasis
withrespecttoordinarysharesorADSs,gainrealizedonthesaleorother
dispositionofordinarysharesorADSswouldingeneralnotbetreatedas
capitalgain.Instead,aUSholderwouldbetreatedasifheorshehad
realizedsuchgainratablyovertheholdingperiodforordinarysharesor
ADSsandwouldbetaxedatthehighesttaxrateineffectforeachsuch
yeartowhichthegainwasallocated,inadditiontowhichaninterest
chargeinrespectofthetaxattributabletoeachsuchyearwouldapply.
Certain‘excessdistributions’wouldbesimilarlytreatedifwewere
treatedasaPFIC.
Additional tax considerations
ScripDividendProgramme
ThecompanyhasintroducedanoptionalScripDividendProgramme,
whereinholdersofordinarysharesorADSsmayelecttoreceiveany
dividendsintheformofnewfully-paidordinarysharesorADSsofthe
company,insteadofcash.Pleaseconsultyourtaxadviserforthe
consequencestoyou.
UKinheritancetax
TheEstateTaxConventionappliestoinheritancetax.ADSsheldbyan
individualwhoisdomiciledforthepurposesoftheEstateTaxConvention
intheUSandisnotforthepurposesoftheEstateTaxConventiona
nationaloftheUKwillnotbesubjecttoUKinheritancetaxonthe
individual’sdeathorontransferduringtheindividual’slifetimeunless,
amongotherthings,theADSsarepartofthebusinesspropertyofa
permanentestablishmentsituatedintheUKusedfortheperformanceof
independentpersonalservices.IntheexceptionalcasewhereADSsare
subjecttobothinheritancetaxandUSfederalgiftorestatetax,theEstate
TaxConventiongenerallyprovidesfortaxpayableintheUStobecredited
againsttaxpayableintheUKorfortaxpaidintheUKtobecredited
againsttaxpayableintheUS,basedonpriorityrulessetforthinthe
EstateTaxConvention.
136BPAnnualReportandForm20-F2010