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Justice reasoned that Resolution 63 conferred upon the public-
sector entity/repass borrower the status of a foreign currency
borrower.35
Petitioner's experts were of the opinion that those Brazilian
Supreme Court decisions, like the Parana II decision, which hold
that public-sector entities are immune from having to pay
withholding tax on their net loan interest remittances abroad, were
incorrectly decided. They maintain that the legal reasoning
employed by the Brazilian Supreme Court Justices is technically
wrong, because foreign currency loans, not import financing loans,
were involved. According to petitioner's experts, Decree-law 401,
by its terms, applies only to import financing loans, and not to
foreign currency loans.36 In our view, the crux of Parana II was
35 It is further to be noted that pursuant to its receipt
of SRF 368, the Central Bank issued FIRCE 80 and did not require
public-sector entities to pay withholding tax on their net loan
interest remittances abroad, regardless of whether such interest
remittances originated from a currency loan or from financing for
the importation of goods.
36 Petitioner's expert Guerra testified, on cross-
examination, as follows:
Q. All right. However, your view is inconsistent
with at least some of the [Brazilian] Supreme Court
cases that we discussed yesterday, correct?
A. No, I don't think it is because if you pay
attention to the * * * [Parana I--1st Panel
decision], it's--the quotation that I made says like--
is exactly that.
What you have there quoted from * * * [the
dissent to the lower Brazilian Federal Court of
Appeals' majority decision] is that if--were the state
(continued...)
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