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income remittances to third parties. Article 123 generally
provides that private agreements concerning the liability to pay
taxes are not binding upon the National Treasury. However, the
National Tax Code is a complementary law and cannot override a
public-sector entity's immunity from taxation under Article 19 of
the Brazilian Constitution.
Similarly, petitioner's reliance upon certain "normative"
rulings33 that were issued by the Brazilian IRS from 1971 through
1974 is also misplaced. These rulings generally hold that immune
or exempt entities are required to withhold with respect to their
remittances of income to third parties. The rationale employed in
these rulings is that although the remitter is immune or exempt
from payment of Brazilian income taxes on its income, this immunity
or exemption of the remitter does not extend to the beneficiary or
recipient of the income. Thus, withholding taxes must be paid by
the remitter on behalf of the recipient, unless the recipient of
the income is itself immune or exempt from Brazilian income tax.
However, these rulings were issued prior to October 15, 1975, and
June 10, 1980, the respective dates upon which the Brazilian
Supreme Court's Parana II decision and SRF 368 were issued.34
33 Normative rulings are published in the Brazilian
Government's Official Gazette and are intended to furnish
guidance to and be applicable to the public at large. In
contrast, the March 1984 Brazilian IRS ruling issued to the
Central Bank was a private ruling that applied only to the
Central Bank and not to other public-sector entities.
34 The earlier rulings do not distinguish between gross
(continued...)
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