It is standard market practice for loan agreements (also known as facility agreements), whether bilateral or syndicated, to:

1. •

   prohibit a borrower from deducting (or withholding) an amount from any payment unless that deduction is required to be withheld by law, and

2. •

   where tax is obliged by law to be withheld from a payment (such as Withholding Tax on interest), require (subject to limited exceptions) a borrower to pay an additional amount that, after deduction of the tax, will leave the lender with the same amount as it would have been entitled to receive had no tax been required to be withheld from the payment—this is known as the tax gross up

The prohibition on withholding is general and applies to any form of withholding. It would, for instance, prevent the borrower from deducting an amount owed by the lender to the borrower. The exception to the prohibition is that any deduction required to be made by law can be deducted from a payment. Because withholding tax on interest