107 T.C. No. 18
UNITED STATES TAX COURT
RIGGS NATIONAL CORPORATION & SUBSIDIARIES,
(f.k.a. RIGGS NATIONAL BANK AND SUBSIDIARIES), Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24368-89. December 10, 1996.
P regularly made and participated in loans to
borrowers located in foreign countries, including Brazil.
It was one of hundreds of banks that were involved in the
restructuring of Brazil's foreign debt.
As required by Brazilian law, various non-tax-immune
Brazilian borrowers paid Brazilian withholding tax on
their net loan interest remittances to P during 1980
through 1986. Although the Brazilian Supreme Court had
held that, under Article 19 of the Brazilian
Constitution, tax-immune Brazilian governmental entities,
like the Central Bank, were not liable to pay withholding
tax on their net loan interest remittances to foreign
lenders, beginning in 1984, the Central Bank purportedly
paid withholding tax on its Brazilian restructuring debt
interest remittances to P.
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