- 42 -
during the relending periods of the DFA's and CGA's because until
the expiration of the applicable relending period the loan funds
were not yet irrevocably committed to the Central Bank, and it,
therefore, had to pay withholding tax on behalf of future,
unidentified "borrowers-to-be" (the borrowers-to-be theory). They
incorporated this borrowers-to-be theory into the revised draft
ruling they prepared, which revised draft ultimately became the
final version of the ruling the Brazilian IRS issued to the Central
Bank in March 1984.
By letter dated March 14, 1984, the Brazilian Finance Minister
forwarded to the Central Bank's President the Finance Minister's
decision on the ruling request and the ruling the Brazilian IRS had
issued. The March 14, 1984, letter stated, in pertinent part:
I refer to the inquiry made by your Bank regarding the
tax treatment for the Agreements called * * * [CGA
and DFA].
2. In this respect, I enclose a copy of the opinion of
* * * [the Brazilian IRS] on the matter, as well as of
the decision I issued on this date on account of the
discussions I had jointly with you for the negotiation of
such agreement.
The ruling issued to the Central Bank was a private ruling that was
given limited circulation. The ruling was not made available to
the public and was not published in the Brazilian Government's
Official Gazette.
The Finance Minister's decision stated:
Case No.:
Interested Party: CENTRAL BANK OF BRAZIL
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