RIO DE JANEIRO (Reuters) - Brazilian iron ore miner Vale (VALE5.SA) is confident it will win a dispute over taxes the government claims the company owes on earnings abroad, CEO Murilo Ferreira said on Friday.
The government has ordered Vale to pay 30.5 billion reais ($15.19 billion) in tax on profits from its foreign subsidiaries. The company said it already paid the taxes to foreign governments and that Brazil’s claim is a form of illegal double taxation.
Vale, along with other companies and industry associations, is disputing the back taxes in Brazil’s highest court.
The company has so-far avoided making any payment because a court injunction says it does not have to until there is a ruling.
“We’re absolutely confident that the Supreme Court understands the situation and the dimension of our investments,” Ferreira told reporters at a lunchtime gathering with reporters in Rio de Janeiro.
Ferreira added that Vale lawyers had assured him it does not need to post a financial bond with the court, a measure akin to a check the government could cash for the taxes should the company lose the dispute.
The chief executive, who has headed the company for a year, said Vale’s investment plans would be curtailed if it was forced to post a guarantee or pay the taxes.
Vale head of legal affairs Clovis Torres warned that the government’s tax policy could harm other large Brazilian companies with international operations.
“The government needs to think about what this will mean for all companies doing business abroad,” he said.
Ferreira cited state-controlled oil major Petrobras (PETR4.SA) and engineering and construction company Odebrecht ODBES.UL as being at risk from the government’s policy.
($1 = 2.0081 Brazilian reals)
Reporting by Jeb Blount and Sabrina Lorenzi; writing by Peter Murphy; editing by Gerald E. McCormick and Andre Grenon