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of other Federal-level governmental entities, like the Central
Bank.
2. Respondent's Experts
Respondent offered testimony on the applicable Brazilian law
concerning the Central Bank's liability for withholding tax on its
restructuring debt interest remittances abroad from two expert
witnesses: Paulo Bekin and Sergio Tostes. Both Bekin and Tostes
were Brazilian lawyers.
Respondent's experts were of the opinion that the Central Bank
was not required to pay withholding tax on its net loan interest
remittances because of (1) its immunity from taxation under Article
19 of the Brazilian Constitution, and (2) its exemption from
withholding tax under various ordinary laws, including Decree-law
1,215 and Decree-law 4,595 (under which the Central Bank is to
enjoy the same privileges, immunities, and exemptions as the
National Treasury).30
Tostes was of the opinion that the Central Bank was not
required to pay withholding tax on its net loan interest
remittances abroad, because of its immunity from taxation under
Article 19 of the Brazilian Constitution. He claimed that
Brazilian law distinguishes between net loans and gross loans, and
that withholding tax would have to be paid by a public-sector
30 The parties' experts agree that, in a strict technical
sense, immunity from taxation derives from the Brazilian
Constitution, whereas an exemption from tax typically is provided
by an ordinary law.
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