Riggs National Corporation & Subsidiaries (f.k.a. Riggs National Bank and Subsidiaries) - Page 86

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          decisions, like the Parana II decision.  Consequently, we conclude          
          that, under Brazilian law, public-sector entities, like the Central         
          Bank, are not required to pay withholding tax on their net loan             
          interest remittances abroad, because of their immunity from                 
          taxation under Article 19 of the Brazilian Constitution.                    
               F.  The Act of State Doctrine                                          
               As indicated previously, we have determined that SRF 368 and           
          certain Brazilian Supreme Court decisions, including the Parana II          
          decision, correctly reflect the applicable Brazilian law that               
          public-sector entities are not required to collect and pay over             
          withholding tax with respect to their net loan interest remittances         




          40(...continued)                                                            
          Status Report filed on that date.  Respondent has never explained           
          how or where she obtained SRF 368."  Petitioner also notes                  
          certain testimony of employees and representatives of various               
          major international banks that the banks' Brazilian counsel had             
          advised them that the Central Bank was required to pay                      
          withholding tax on its net loan interest remittances abroad.  The           
          record does not support petitioner's assertion that none of the             
          banks were aware of SRF 368 until Mar. 18, 1994.  Alexandre                 
          Leite, who headed Citibank-Brazil's tax division, testified that            
          after the Central Bank's issuance of FIRCE 80 in May 1981, he               
          concluded that Citibank would not be able to persuade the Central           
          Bank to issue DARF's with respect to its 432 program net loan               
          interest remittances.  He stated that with FIRCE 80 "there was a            
          ruling from the tax revenue service  *  *  *  that any immune               
          entity would not be obliged to  *  *  *  [issue withholding                 
          receipts in remitting interest]."  See supra note 12.  We thus do           
          not believe that the major international banks, like Citibank,              
          that were seeking DARF's with respect to the Central Bank's net             
          loan interest remittances to them, much less these banks'                   
          Brazilian counsel, were unaware of SRF 368 until Mar. 18, 1994.             
          The record further fails to disclose what specifically the banks'           
          Brazilian counsel told the banks or did not tell the banks with             
          respect to SRF 368.                                                         



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