- 63 -
Parana, and the remittance being done, it is indisputable
that it will be the contribuente.
However, the State is immune by virtue of art. 19
* * * of the Federal Constitution.
In my view, the conclusion is incontrovertible that
the burden of the payment falls on the remitter, and in
the present case, this, a unit of the Federation, is
immune that is, not obligated to pay the tax.
There is no need to fear that the foreign creditor
shall benefit from the immunity of the debtor.
In view of the sole paragraph of art. 11 of Decree-
law 401 * * * , neither is the creditor of the
interest abroad the contribuente, but rather the
remitter, on occasion of the remittance.
In its February 21, 1979, decision in State of Minas Gerais
v. Federative Republic of Brazil (hereinafter for convenience
referred to as the Minas Gerais decision), the full Brazilian
Supreme Court held that the State of Minas Gerais and its State
Highway Department were not required to pay withholding tax on
interest remittances they made as repass borrowers with respect to
their Resolution 63 repass loans, because they were immune from
such withholding tax under Article 19 of the Brazilian
Constitution.24 The reporting Brazilian Supreme Court Justice
24 In Minas Gerais, the reporting Brazilian Supreme Court
Justice stated:
Nowadays there is no further doubt on the subject,
after * * * [Summula No. 586], establishing a
position derived from art. 11 of Decree-law No. 401 of
December 30, 1968 as follows: "[Withholding of] Income
tax is due on interest remitted abroad, based on a loan
agreement."
We must thus now * * * [address the other
(continued...)
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