Exemption from Taxation — Foreign Loans

October 1, 1981 BIR RULING NO. 192-81 024-00 000-79 192-81 National Power Corporation Bonifacio Drive, Port Area P.O. Box 2123, Manila Attention: Mr . Gabriel Y . Itchon President Gentlemen : In reply to your letter dated November 20, 1980, please be informed that payment of the principal, interest and other charges on foreign loans contracted by the National Power Corporation (NPC) are exempt from taxation, pursuant to Section 8(b) of Republic Act No. 6395, as amended by P.D. No. 1360, the pertinent portion of which reads as follows: cdta "Section 8. . . . xxx xxx xxx "(b) Foreign Loans . . . The loan, credit and indebtedness contracted under this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services by the Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act shall also be exempt from all direct and indirect taxes, fees, imposts, and other charges and restrictions, including import restrictions previously and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political subdivisions." Accordingly, that Corporation is not required to deduct and withhold any tax on payments (principal, interest or other charges) due to Nippon Credit Bank, Ltd. in accordance with the Loan and Guarantee Agreement, dated June 30, 1980. Very truly yours, RUBEN B. ANCHETA Acting Commissioner