- 92 -
decide whether these alleged withholding tax payments, in fact,
were made by the Central Bank.47
46(...continued)
disclosed to them the relevant facts. See sec. 1.901-2(e)(5)(i),
Income Tax Regs. In any event, on the record presented in the
instant case, petitioner has failed to establish it would be
eligible for such relief. As previously discussed, petitioner's
assertion that no banks lending to Brazil were aware of SRF 368
until Mar. 18, 1994, is untrue. We do not believe that certain
major international banks, like Citibank, much less these major
international banks' Brazilian counsel, were unaware of SRF 368
and the Brazilian Supreme Court's Parana II decision. See supra
note 40. Moreover, notwithstanding the March 1984 Brazilian IRS
private ruling issued to the Central Bank, even some of the
employees and representatives of these major international banks
who testified at trial indicated that they were skeptical of the
ruling's borrowers-to-be theory.
47 The parties disagree over whether the Central Bank
actually paid "withholding tax" on its restructuring debt
interest remittances to foreign lenders during the relending
periods of the CGA's and DFA's, beginning in 1984. At trial,
petitioner offered the testimony of an employee of Banco do
Brazil, the Brazilian National Treasury's agent for payment of
taxes. The Banco do Brazil employee was offered by petitioner as
an expert witness with respect to the manner in which Banco do
Brazil accounted for its withholding tax payment collections. He
examined one purported withholding tax payment of the Central
Bank on its restructuring debt interest remittances, which he
selected at random, and verified that certain entries had been
made on Banco do Brazil's books reflecting Banco do Brazil's
receipt of the Central Bank's purported withholding tax payment.
However, as we noted in our findings, it is not known: (1)
Whether the Central Bank was reimbursed by the National Treasury
for its restructuring debt "withholding tax payments", or (2)
whether the Central Bank received the pecuniary benefit based on
such "withholding tax payments". Petitioner's expert
acknowledged that he had not inquired into whether the Central
Bank received the pecuniary benefit or whether any other
transactions took place resulting in a "refund" being made of the
Central Bank's "withholding tax payments". Although we do not
decide the payment issue, the Central Bank's actual receipt of
the pecuniary benefit would be highly probative evidence
confirming its actual payment of this "withholding tax". If the
Brazilian Government reimbursed the Central Bank for these
"withholding tax payments", because the Central Bank was acting
(continued...)
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