November 29, 2013 / 1:45 AM / in 4 years

Brazil's Fibria agrees to pay $241 mln to settle tax dispute

BRASILIA, Nov 28 (Reuters) - Brazil’s Fibria Celulose SA , the world’s largest producer of eucalyptus pulp, said on Thursday it had agreed to pay 560.45 million reais ($241.12 million) in back taxes to the government to settle a corporate tax dispute.

Fibria is the latest Brazilian company to accept a government offer to reduce a disputed tax bill. Mining giant Vale SA on Wednesday said it would pay 22.325 billion reais in taxes on profit from overseas operations.

President Dilma Rousseff is relying on such settlements to beef up government accounts to meet a key fiscal goal, which is under heavy scrutiny from investors.

The rapid erosion of Brazil’s finances this year has triggered alarm in financial markets, raising fears of a sovereign rating downgrade next year that could scare off investors and undermine a timid recovery in Latin America’s largest economy.

Fibria said in a filling that the impact of the tax payment would be recorded in its results for the fourth quarter of this year.

Fibria has been struggling for over a year to cut its debt, which has battered results as a volatile exchange rate drives up foreign debt-servicing costs.

Fibria reported third-quarter net income of 57 million reais, up from a loss of 212 million reais a year earlier but below the average forecast of 133 million reais in a Reuters survey of six analysts.

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