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The Finance Minister’s decision stated:
Case No.: Interested Party: CENTRAL BANK OF BRAZIL
DECISION: I agree fully with the conclusions of the
attached opinion of the * * * [BRS]. In view of item
13 of said opinion, I direct the Central Bank of Brazil
to implement the payment of income tax on or before the
last business day of the month following the month in
which the withholding is made.
Brasilia, March 14, 1984
/Ernane Galveas/ ERNANE GALVEAS Minister of Finance
The BRS ruling, which he enclosed to the Central Bank,
stated:
Federal Government Service Ministry of Finance * * *
[BRS]
OPINION
Income tax withheld on interest due to parties resident
or domiciled abroad * * * [FIRCE] of the Central Bank
of Brazil requests an opinion about the tax treatment
of Agreements * * * under which such government agency
(autarquia) is liable for the payments and remittances
pertaining to them, in the period of availability of
such funds for relending.
(2) By virtue of the special characteristics of these
transactions, the question arises as to whether there
is an incidence of income tax, in view of the
government agency’s (autarquia’s) assumption of the
burden, and if so whether,
(a) the DARFs may be issued in the name of the
agent bank centralizing each project, considering that
the large number of lenders makes it impractical to
complete one DARF for each of them;
(b) the tax rates established in the treaties
signed by Brazil to avoid double taxation may be
applied;
(c) the pecuniary benefit * * * applies;
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