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H. The Central Bank’s Payment of Withholding Tax on Its
Restructuring Debt Interest Remittances and the Caixa Unico System
In Brazil, Banco do Brazil, which among other things operated
as a commercial bank, was the Brazilian National Treasury’s agent
for payment of taxes. During 1980 through 1986, the Central Bank
collected and paid over to Banco do Brazil, for the account of the
National Treasury, withholding taxes, export taxes, taxes on
financial operations, and social security taxes. The withholding
taxes the Central Bank collected and paid over included withholding
tax on the salaries of its employees and withholding tax on its
interest remittances to foreign lenders.
Before 1980, the Central Bank made tax payments to Banco do
Brazil by issuing an administrative check. The check would be
physically delivered to Banco do Brazil and then cashed through the
normal check liquidation and payment procedure. Beginning in 1980,
there was a change in the manner by which the Central Bank made tax
payments. Rather than issuing an administrative check, the Central
Bank credited Banco do Brazil’s Banking Reserves Account at the
Central Bank with the amount of the tax payment.
By law, all commercial banks were required to maintain a
Banking Reserves Account at the Central Bank with a minimum balance
equal to 20 percent of their demand deposits. Banco do Brazil,
however, was not subject to this requirement because the Central
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