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apply the case's net-loan-versus-gross-loan rationale in similar
cases involving foreign currency loans.
The evidence reflects that this particular point petitioner's
experts raise involves an area of Brazilian law in which there has
been considerable controversy. Although Article 11 of Decree-law
401, by its terms, seems to be applicable only to import financing
loans, even petitioner's experts acknowledge that Decree-law 401
and the 1972 Brazilian Supreme Court decision that upheld the law's
validity have caused a great deal of confusion and generated
controversy in the area. As petitioner's expert Gurerra related:
some key legal principles in connection with the taxation
of interest remitted by * * * [Brazilian borrowers]
to * * * [foreign lenders]--namely the * * *
[National Tax Code] definitions of taxable event,
taxpayer, tax base and tax responsible and the scope of
the * * * [constitutional] tax immunity--were neither
adequately nor consistently applied by the * * *
[Brazilian Supreme Court].
* * * The source of this problem was * * * [the
1972 Brazilian Supreme Court decision that upheld the
validity of Decree-law 401], while * * * [Article 11
of Decree-law 401 in defining the borrower remitting the
interest abroad to be the contribuente] clearly violates
the * * * [National Tax Code] definitions of taxable
event and taxpayer; the majority opinions varied largely
and did not express a precise understanding of the * *
* [National Tax Code] on the main issues of the case.
Subsequently, in addressing other cases dealing with
these topics, the * * * [Brazilian Supreme Court] was
confronted with its conclusion in * * * [its 1972
decision] and found no guidance in the varied opinions
that had formed the majority in * * * [that
precedent].
It is neither necessary nor appropriate for us to decide
whether certain Brazilian Supreme Court decisions, including the
Parana II decision, were technically "wrong" in part of their legal
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