- 8 - remitted the proceeds (in foreign currency) to the borrower via a commercial bank in Brazil. The Brazilian bank converted the foreign currency into Brazilian currency by means of an exchange contract, whereby the borrower sold the foreign currency to the bank for Brazilian currency at the official exchange rate periodically set by the Central Bank. The Brazilian borrower received a certificate of registration that enabled the borrower to effect payment of interest, and principal, in the foreign currency in which the loan was made. On each payment date, the borrower purchased foreign currency from a Brazilian bank at the official exchange rate. The Brazilian bank then tendered the foreign currency to the foreign lender. C. Payment of the Withholding Tax Generally Where withholding tax was required, Brazilian law prohibited remittance of an interest payment to a foreign lender without proof of payment of the withholding tax on the interest remitted abroad. Under Brazilian law, the borrower initiated payment of the withholding tax by submitting a Documento de Arrecadacao de Receitas Federais (DARF) and the accompanying tax payment to a commercial Brazilian bank. The bank making the interest payment inPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011