- 75 -
restructured was "exempt from withholding tax on the grounds of
being considered governmental debt."32
Petitioner's reliance upon Article 9 and Article 123 of the
National Tax Code is misplaced. Article 9 generally provides that
an entity's immunity or exemption from tax will not relieve it of
its obligation to collect withholding tax that is due upon its
32 We do not find credible da Silva's testimony that the
entire technical staff of the Brazilian IRS believed that the
Doniak-Kahan draft ruling accurately presented the applicable
Brazilian law with respect to the Central Bank's net loan
interest remittances abroad. Additionally, da Silva claimed that
it was not necessary to publish the March 1984 ruling, because
the Brazilian IRS's technical staff were well aware of the
correctly applicable Brazilian law with respect to public-sector
entities' net loan interest remittances abroad--presumably, as
reflected in the Doniak-Kahan draft ruling that the Brazilian IRS
never issued. We are not convinced by his explanation as to why
the March 1984 Brazilian IRS ruling issued to the Central Bank
was a private ruling. As an expert witness for respondent noted,
although the decision to publish a Brazilian IRS ruling in the
Brazilian Government's Official Gazette is discretionary, the
March 1984 ruling's position represented such a drastic departure
from existing law that, in his opinion, this ruling should have
been published to provide public guidance--if the Brazilian IRS
indeed was changing its interpretation and position with respect
to the applicable law pertaining to public-sector entities' net
loan interest remittances abroad. Da Silva was silent about
what, if any, immediate efforts the Brazilian IRS took either to
(1) revoke SRF 368, or (2) at minimum, publicize, prospectively
apply, and enforce its alleged "new position" on the applicable
Brazilian law concerning public-sector entities' net loan
interest remittances abroad. We do not entirely understand
petitioner's contention, on brief, that SRF 368 was revoked upon
the Brazilian IRS's issuance of the March 1984 private ruling, as
this private ruling applied only to the Central Bank, and not to
other public-sector entities. See infra note 33. In fact,
petitioner's failure to offer evidence concerning such Brazilian
IRS actions to enforce the latter's alleged "new position",
reasonably contemporaneous to its issuance of the March 1984
private ruling to the Central Bank, leads us to conclude that
this evidence would have been harmful to petitioner's case. See
Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165
(1946), affd. 162 F.2d 513 (10th Cir. 1947).
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