- 13 -
increased to 95 percent of the tax; and on May 8, 1980, the
pecuniary benefit was reduced to 40 percent of the tax.
On June 28, 1985, the pecuniary benefit was reduced to zero
through the issuance of Resolution 1,033 by the Central Bank.9
Resolution 1,033 provided, in pertinent part:
BANCO CENTRAL DO BRASIL
Resolution no. 1,033
* * * the BANCO CENTRAL DO BRASIL hereby makes it
public knowledge that, at a meeting held on this date,
the NATIONAL MONETARY COUNCIL * * *
RESOLVED:
I - The pecuniary benefit specified in Resolution
no. 335, dated 08.05.75, with later alterations, is
hereby reduced to 0 (zero).
II - This Resolution will go into effect on the date
of its publication.
Brasilia (DF), June 28, 1985
Antonio Carlos Braga Lewgruber
PRESIDENT
9 The parties have stipulated and agreed to use June 28,
1985, as the date relating to the reduction of the pecuniary
benefit to zero. As will be discussed infra, in the tax payment
documentation issued to foreign lenders in connection with the
Central Bank’s post-June 28, 1985, interest remittances to them,
the Central Bank continued to report that it was receiving a
pecuniary benefit equal to 40 percent of the withholding tax the
Central Bank was purportedly paying on the foreign lenders’
behalf. As a result, petitioner, on its tax returns, reduced by
40 percent the foreign tax credits it claimed for Brazilian tax
on the Central Bank’s and other Brazilian borrowers’ post-June
28, 1985, loan remittances to it, even though after June 28,
1985, no Brazilian borrower (including the Central Bank) actually
received a pecuniary benefit in connection with its loan
remittances made abroad.
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