April 29, 2011 / 11:38 PM / 8 years ago

UPDATE 1-Petrobras faces possible $9.8 bln in back taxes-report

* Company paid less taxes than it should, gov’t says

* Charges could hurt earnings in coming years

* Petrobras dismisses report, denies accumulating arrears

(Updates with Petrobras official denial)

SAO PAULO, April 29 (Reuters) - Brazil’s state-run oil company Petrobras (PETR4.SA)(PBR.N) could be forced to pay 15.5 billion reais ($9.8 billion) in back taxes to the Brazilian government, the Folha de S. Paulo newspaper reported Friday.

Petrobras issued a statement later in the day saying it was contesting legal action local tax authorities initiated against it to recover more tax.

Brazil’s Secretariat of the Federal Revenue is seeking payment of several taxes including more income tax and social contributions. It argues Petrobras paid less than it should or did not pay at all some of the taxes.

Petrobras did not state how much money the tax authorities claimed was owed to them in unpaid taxes but if it loses the battle, the charges could hurt the company’s earnings in coming years as it has not made any provision for this expense.

“In light of the fact that until now there has been no definitive (legal) decision on the charges ... there is no reason to classify them as a debt,” the statement said.

The company posted in the fourth quarter of 2010 its highest profit ever, with net income soaring 38 percent on financial earnings and lower expenses. [ID:nN25159969] ($1 = 1.58 reais) (Reporting by Inae Riveras and Peter Murphy; Editing by Derek Caney and Sofina Mirza-Reid)

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