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DECISION: I agree fully with the conclusions of the
attached opinion of the * * * [Brazilian IRS]. In
view of item 13 of said opinion, I direct the Central
Bank of Brazil to implement the payment of income tax on
or before the last business day of the month following
the month in which the withholding is made.
Brasilia, March 14, 1984
/Ernane Galveas/
ERNANE GALVEAS
Minister of Finance
The Brazilian IRS ruling, which he enclosed to the Central
Bank, stated:
Federal Government Service
Ministry of Finance
* * * [Brazilian IRS]
OPINION
Income tax withheld on interest due
to parties resident or domiciled
abroad
* * * [FIRCE] of the Central Bank of Brazil requests
an opinion about the tax treatment of Agreements called
* * * [CGA and DFA] under which such government agency
[autarquia] is liable for the payments and remittances
pertaining to them, in the period of availability of such
funds for relending.
(2) By virtue of the special characteristics of these
transactions, the question arises as to whether there is
an incidence of income tax, in view of the government
agency's [autarquia's] assumption of the burden, and if
so whether,
(a) the DARF's may be issued in the name of the agent
bank centralizing each project, considering that the
large number of lenders makes it impractical to complete
one DARF for each of them;
(b) the tax rates established in the treaties signed by
Brazil to avoid double taxation may be applied;
(c) the pecuniary benefit * * * applies;
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