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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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