VZCZCXRO1554
RR RUEHRG
DE RUEHBR #1217 2561125
ZNR UUUUU ZZH
R 121125Z SEP 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 2413
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 6574
RUEHSO/AMCONSUL SAO PAULO 2707
RUEHRG/AMCONSUL RECIFE 8427

UNCLAS BRASILIA 001217 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:N/A 
TAGS: EFIN EINV ECON BR
SUBJECT: BRAZIL: BTT-Receita Federal Lina Vieira and Ambassador 
 
¶1. (SBU) SUMMARY:  In a meeting with the new head of Receita 
Federal, Lina Vieira and the chief international tax negotiator 
Marcus Pontes, Vieira appeared focused, well-briefed and clearly 
knowledgeable both on general tax issues and very aware of domestic 
political atmospherics.  She understood some English, but spoke only 
Portuguese.  While appearing generally supportive of Bilateral Tax 
Treaty discussions with the United States, political difficulties in 
securing passage in the Brazilian congress of the Brazil-US Tax 
Information Exchange Agreement (TIEA), delays in GOB receiving a 
letter from Brazilian CEO Forum members affirming desire for a BTT, 
and internal reorganizational issues appear to be slowing progress 
toward a further round of negotiations.  END SUMMARY 
 
¶2. (SBU) Information proposal from Treasury:   While initially 
characterizing this proposal as still under review by Receita 
Federal lawyers, during the course of the meeting Pontes 
acknowledged, "We are comfortable with the language Treasury 
proposed, but we can not respond with a greenlight while the TIEA is 
in such political trouble."  Pontes added Receita is comfortable 
informally letting Treasury know the language is basically 
acceptable, but that the agency will not respond formally or in 
writing at this point.  Vieira underlined, "we love it (the TIEA and 
information exchange under a BTT) because we get more from the 
United States than we are asked to give." 
 
¶3. (SBU) September discussion dates response:   Pontes said, with 
Vieira's agreement, that Receita Federal absolutely needed to have 
in hand the letter from the Brazilian CEO Forum members explaining 
why they want a BTT before Receita Federal, politically, could move 
to schedule a date for the next negotiating round.  He noted Receita 
Federal had both the letter from the American CEO Forum 
representatives and from the National Foreign Trade Council to 
Treasury.   Pontes said, again with Vieira agreeing, that Receita 
Federal can not, due to political optics, proceed with two letters 
from American business to USG wanting a BTT and nothing from 
Brazilian business to GOB. The Ambassador urged Receita to at least 
"pencil in" a date before getting this letter.  He did not receive a 
commitment, but Vieira again emphasized information exchange, "is 
very valuable to us, I want to reinforce this point."  Marcus added 
that the CEO Forum support noted in an August 15 Valor article was 
helpful, but Receita needs the letter addressed to the government 
outlining why Brazilian CEOs want a BTT. (NOTE:  The letter signed 
by Brazilian CEO Forum chair Josue Gomes da Silva and dated August 
29, was transmitted to Receita Federal on September 1.  We 
understand Receita offered September 30-October 2 for the next round 
of discussions with Treasury). 
 
¶4. (SBU) Op-Ed:  Lina and Marcus enthusiastically welcomed the 
Ambassador's offer to do an op-ed under his name clarifying the USG 
position on the TIEA.  Receita Federal reacted much more lukewarmly 
to an inquiry whether the mission reaching out directly to the 
Chamber's Constitutional committee would be helpful. 
 
¶5. (SBU) Delaware:  Receita Federal explained that law 11.727 will 
withdraw Implementing regulation 188 which lists tax haven countries 
and regions.  Receita Federal must publish a new list to implement 
law 11.727.  Pontes confirmed that Delaware is one of the regions 
under consideration as Receita decides on its new tax haven list. 
Pontes noted that Receita Federal is worried about Brazilian 
companies that are "mis-using" Delaware and wants to address that 
perceived problem.   No decisions on countries/regions to be 
identified as tax havens have been made. 
 
¶6. (SBU) Comment:  On August 28, Receita Federal asked to cancel the 
TDA-funded Global Customs Initiative workshop and reschedule for 
October. Receita Federal told post that Lina Vieira is required to 
concentrate on fully accessing/evaluating each regional operation of 
Receita Federal and will be travelling heavily this month while 
simultaneously learning the depth of the portfolio she assumed on 
July 31.  Separately, Receita Federal informed FINATT that Receita 
Federal has been tasked by the Finance Ministry to develop a 
structural reform proposal for re-organizing the Agency, which has 
thrown the Secretary and her staff into overdrive.  In sum, we are 
receiving strong signals that Receita Federal is devoting itself as 
its first priority to its own internal organization, structure, and 
way forward.  This could impact Receita Federal's ability and 
readiness to engage with USG in the short-term on our various areas 
of cooperation with this agency.  END COMMENT. 
SOBEL