Coupon income tax
Coupons are subject to personal income tax, withheld by the broker or the depository at the moment of payment.
How to read the number
The tax is taken on the coupon received whether or not the bond has been sold — unlike gains on price, which are counted when a trade happens.
When the metric lies
Withholding applies to the full coupon, while the accrued interest paid at purchase is recognised separately in the financial result. Post-tax yield therefore differs from the yield implied by the terms of the issue.
Also known as: tax on coupons