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The amount of the pecuniary benefit varied over the years.
From May 8, 1980, to July 27, 1985, the pecuniary benefit was 40
percent of the withheld tax. On June 28, 1985, it was reduced to
zero.
Brazil began experiencing problems in paying its foreign
debt in 1982. Petitioner was one of hundreds of banks involved
in the restructuring of Brazil’s foreign debt. As part of this
restructuring, the Central Bank served as the borrower under
certain restructuring debt loans it entered into with Brazil’s
foreign lenders. The Brazilian Government guaranteed the Central
Bank’s obligations to the foreign lenders under these
restructuring debt loans. All of these restructuring debt loans
were net loans (i.e, the Central Bank and the foreign lenders
agreed that all specified payments of principal and interest to
the foreign lenders, under the loan contracts, would be made net
of any applicable Brazilian taxes).
As relevant herein, the restructuring of Brazil’s foreign
debt was divided into three phases. The loans made to the
Central Bank under phase I and phase II were net loans that had
repayment terms of 7 to 9 years. In phase I and phase II,
certain funds lent to the Central Bank were to be re-lent by the
Central Bank to other Brazilian persons and companies. The phase
I and phase II loans provided that there would be an initial
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