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including the Parana I--1st Panel and Parana I--Full Bench
decisions, was contrary to other Brazilian Supreme Court decisions,
including the Parana II decision.
Petitioner's experts were of the opinion that certain
Brazilian Supreme Court decisions, including the Parana II
decision, holding that public-sector entities were not required to
pay withholding tax on their net loan interest remittances abroad,
were incorrectly decided. They maintained that these Supreme Court
decisions improperly extended and applied the taxation principles
of Decree-law 401 to foreign currency loans. Guerra claimed that
the net-loan-versus-gross-loan rationale used in the Parana II
decision to distinguish the Parana I--1st Panel decision was
erroneous, but he acknowledged that this same rationale was applied
and utilized in the Santo Andre I decision. He claimed that this
was a repetition of the error.
Some of petitioner's experts were further of the opinion that
Article 19 of the Brazilian Constitution would not prevent the
Central Bank and other Federal-level autarquias from being subject
to withholding tax on their net loan interest remittances, as
Article 19 of the Constitution, they claim, prohibits taxation only
between the different governmental levels. According to them,
Article 19 prevents the Federal Government of Brazil from taxing
the assets, revenues, and operations of State and municipal
governmental entities, but not the assets, revenues, and operations
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