Cartorama C.A. had been granted extensive credits by a related party Universal Paper S.A. The tax administration (SRI) claimed that no supplier would grant such credits to Cartorama given the company’s financial situation. Hence the loan was instead considered a equity contribution from Universal Paper S.A. and tax deductions claimed by Cartorama C.A. for interest payments for fiscal years 2005 and 2006 were disallowed. The Company disagreed with the assessment at brought the case to the court. The regional court held in favor of Cartorama C.A. and annulled the assessment, but this decision was then appealed by the tax authorities before the National Court. Judgment of the Court The National Court dismissed the decision of the regional court and confirmed the validity and legitimacy of the assessments issued by the Regional Director of the Internal Revenue Service. Click here for English Translation Click here for other translation ...