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Brazilian Government’s budget. During the time relevant to this
case, Banco do Brazil was owned 51 percent by the Brazilian
Government and 49 percent by private shareholders.
During the years in issue, Banco do Brazil was the Brazilian
National Treasury’s agent for payment of taxes. 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.
On its books, Banco do Brazil made entries reflecting the
following: (1) Transfers of Central Bank tax payments to Banco
do Brazil’s Banking Reserves Account at the Central Bank, (2)
collections of Federal Government tax receipts, and (3) deposits
of Federal Government revenues payable upon demand to the
National Treasury.
Brazil imposed restrictions on the receipt and exchange of
foreign currency. Law No. 4,131 (enacted on September 3, 1962,
and amended by Law No. 4,390 on August 29, 1964) established the
basic rules for foreign investments in Brazil and the remittances
of funds abroad with respect to such investments. Law No. 4,131
regulated and set conditions for loans made to a person or entity
residing or domiciled in Brazil by a person or entity residing or
domiciled abroad. By law, the Central Bank set the official
exchange rates and registered and approved all loans from foreign
lenders to Brazilian borrowers. Through the registration
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Last modified: May 25, 2011