Indofood International Finance Ltd v JP Morgan Chase Bank N.A. London Branch

Indofood International Finance Ltd v JP Morgan Chase Bank N.A. London Branch

On the balance of probabilities, the Indonesian Tax Court would hold that Newco, if interposed, would not be the beneficial owner of the interest under the Dutch DTA, and thus the measure was not available to avoid the increased withholding tax. The Issuer established that there were no reasonable measures available to avoid the higher withholding tax, satisfying the condition for early redemption of the loan notes.

Parties
Claimant/appellant: Indofood International Finance Ltd.; Defendant/respondent: JPMorgan Chase Bank N.A., London Branch
Jurisdiction
England and Wales
Judgment Date
02 March 2006
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal allowed
Legal Topics
Double Taxation Agreements, Withholding Tax, Beneficial Ownership, Treaty Shopping, Interpretation of Tax Treaties
Tax Law Contract Law International Law Double Taxation Agreements Withholding Tax Beneficial Ownership Treaty Shopping Interpretation of Tax Treaties

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Parties

Indofood International Finance Ltd.

Claimant/appellant

JPMorgan Chase Bank N.A., London Branch

Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether the interposition of a Dutch company (Newco) between the Parent Guarantor and the Issuer would allow the avoidance of increased Indonesian withholding tax under the Dutch DTA.
  2. 2 Whether Newco would be the beneficial owner of the interest for the purposes of the Dutch DTA.
  3. 3 Whether Newco would be resident in the Netherlands for the purposes of the Dutch DTA.

Ratio Decidendi

On the balance of probabilities, the Indonesian Tax Court would hold that Newco, if interposed, would not be the beneficial owner of the interest under the Dutch DTA, and thus the measure was not available to avoid the increased withholding tax. The Issuer established that there were no reasonable measures available to avoid the higher withholding tax, satisfying the condition for early redemption of the loan notes.

Court Disposition

Appeal allowed

Orders

  • Declaration that the Issuer is entitled to redeem the loan notes under the relevant condition, as there are no reasonable measures available to avoid the increased withholding tax.