Bridget English and Richard Sultman (Cleary Gottlieb) discuss key tax issues arising from the anticipated discontinuation of LIBOR and transition to alternative ‘nearly risk free’ rates.
Although by no means exhaustive in this article we seek to highlight some of the key UK tax considerations arising from London interbank offered rates (LIBORs) the discontinuation of and the transition to ‘nearly risk free’ rates (RFRs) in relation to loans bonds and derivatives (see figure 1 for the main LIBOR rates). Much of the tax analysis will depend on factors such as the contractual mechanics for addressing the transition and the applicable accounting treatment which will vary from contract to contract.
Figure 1: The main LIBOR rates
Existing benchmark
Alternative RFR
Benchmark administrator
GBP LIBOR
Reformed sterling overnight index average (SONIA)
Bank of England
USD LIBOR
Secured overnight financing rate (SOFR)
Federal Reserve
Bank of New York
JPY LIBOR
Tokyo overnight average rate...
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Bridget English and Richard Sultman (Cleary Gottlieb) discuss key tax issues arising from the anticipated discontinuation of LIBOR and transition to alternative ‘nearly risk free’ rates.
Although by no means exhaustive in this article we seek to highlight some of the key UK tax considerations arising from London interbank offered rates (LIBORs) the discontinuation of and the transition to ‘nearly risk free’ rates (RFRs) in relation to loans bonds and derivatives (see figure 1 for the main LIBOR rates). Much of the tax analysis will depend on factors such as the contractual mechanics for addressing the transition and the applicable accounting treatment which will vary from contract to contract.
Figure 1: The main LIBOR rates
Existing benchmark
Alternative RFR
Benchmark administrator
GBP LIBOR
Reformed sterling overnight index average (SONIA)
Bank of England
USD LIBOR
Secured overnight financing rate (SOFR)
Federal Reserve
Bank of New York
JPY LIBOR
Tokyo overnight average rate...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
