* Vale had agreed to pay $10 bln in double-taxation dispute
* Company shares rise most in two weeks after court ruling
* Government says ruling will not change November tax
(Adds additional court and finance ministry comment and Vale
decision not to comment)
By Jeb Blount
RIO DE JANEIRO, April 24 A Brazilian appeals
court on Thursday gave mining company Vale SA a
partial victory in its 22.3 billion real ($10 billion) dispute
with Brazil's government over the taxation of its foreign units.
Brazil's Superior Justice Tribunal, the last court of appeal
before the Supreme Court, ruled three to one that Brazilian
treaties with Belgium, Luxembourg and Denmark prevent Brazil
from taxing the profits of Vale units in those countries, the
court's press office said.
The court also ruled that Brazilian rules allowing taxation
of Vale profit in Bermuda are valid because Brazil has no
relevant tax treaty with the island, the press office said.
Vale declined to comment on the ruling or say how much of
the company's business is conducted by its units in Belgium,
Luxembourg, Denmark or Bermuda. With operations in more than 30
countries, Rio de Janeiro-based Vale is Brazil's most
Shares of Vale, the world's largest iron ore exporter, rose
after the decision. The company's preferred shares, the
most-traded class of its stock, rose 1.62 percent, the most in
two weeks, to 28.15 reais.
Vale and other Brazilian multinationals such as steelmakers
Cia. Siderurgica Nacional and Gerdau SA
say Brazil is unfairly assessing tax on subsidiaries that has
already been paid to foreign governments, a practice known as
Being forced to pay taxes twice, once in the country of
operation and again at home, reduces Vale's competitiveness with
rivals based in countries whose governments have moved to end
In November, Vale agreed to end lawsuits contesting
assessments on foreign units for the 2003-2012 period in
exchange for a discount that cut its estimated 45 billion-real
liability in half.
At the time, though, Chief Executive Murilo Ferreira also
said that Vale had not renounced its position that the
government's taxation rules are wrong and that if courts
eventually agree, it will demand repayment.
The court's ruling involves double taxation of Vale via a
levy on the increase in the value of its equity in four Belgian,
Danish and Luxembourg-based units, the court's press office said
in a statement.
Brazil's finance ministry said it plans to appeal the
ruling. The ministry also said the court's decision will have no
impact on Vale's $10 billion November tax settlement. Under the
agreement, the ministry said in a statement, Vale has
irrevocably given up the right to reduce or receive any rebate
for all related assessments for the 2003-2012 period with the
exception of a some taxes paid on 2005 activity.
Brazilian Finance Minister Guido Mantega on Thursday said
that new rules brought in as part of the November tax deal with
Vale aim to expand taxation of Brazilian companies overseas.
"The Supreme Court will look at the new legislation that was
approved by Congress, the result will be that more companies
will pay," Mantega told reporters in Brasilia.
($1 = 2.21 Brazilian reais)
(Reporting by Jeb Blount; Additional reporting by Nestor
Rabello in Brasilia; Editing by Meredith Mazzilli and Andrew