- 64 -
reasoned that Resolution 63, which authorizes the repassing of the
foreign loan, confers upon the repass borrower the status of a
foreign currency borrower and concluded that the repass borrower
could avail itself of its tax immunity.25 The Brazilian Supreme
Court in Minas Gerais further held that certain mixed capital
companies were required to pay withholding tax on interest
remittances they made as repass borrowers with respect to their
Resolution 63 repass loans, because these mixed capital companies
did not enjoy immunity from taxation, as they have the same status
under the Brazilian Constitution as private companies.26
On August 30, 1979, the full Brazilian Supreme Court issued
its decision unanimously rejecting the objections of the State of
Parana Highway Department in its appeal from the Parana I--1st
Panel decision (hereinafter for convenience referred to as the
24(...continued)
argument] invoked by the plaintiffs: the remittances
are from the State of Minas Gerais and thus [enjoy] the
benefit of reciprocal tax immunity granted under art.
19 * * * of the Constitution.
A "summula" is a statement of a legal proposition that the
Brazilian Supreme Court feels is firmly established under
Brazilian law.
25 In the case of a Resolution 63 repass net loan, the
repass borrower generally must also provide the repass lender
with the funds to pay the withholding tax on the repass lender's
interest remittances to the foreign lender. However, as noted in
our findings, if the repass lender is entitled to a pecuniary
benefit, the repass lender must then pass on the benefit to the
repass borrower.
26 The Minas Gerais decision does not specifically state
whether the Resolution 63 repass loans involved were net loans or
gross loans. However, see supra note 25.
Page: Previous 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 NextLast modified: May 25, 2011