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Brazil government wins appeal in tax dispute with Vale
May 4, 2012 / 12:09 AM / 6 years ago

Brazil government wins appeal in tax dispute with Vale

BRASILIA (Reuters) - Brazil’s highest court overturned an injunction that had suspended collection of disputed tax claims from Vale SA (VALE5.SA), the world’s largest iron-ore producer, the company said on Thursday, adding it would appeal the ruling.

The miner is fighting four tax bills issued by the federal tax authority, totaling 30.5 billion reals ($15.83 billion) on its earnings abroad. Vale said this is tantamount to double taxation as it paid taxes to foreign governments.

The Superior Court of Justice ruled in favor of the federal tax authority in its appeal against an injunction granted in March that suspended payment of the taxes by Vale. Vale says it will now appeal in order to reinstate that suspension.

“Vale remains confident in its arguments and will continue to pursue all appropriate legal actions until a final decision on the merits is reached,” it said in a statement.

A statement on the court’s website confirmed that the company still had the right to appeal the decision.

A Vale spokesperson said the company would not have to make an immediate payment should the tax authority request it, since it planned to appeal against the latest ruling.

The dispute over whether the taxes are due is waiting to be judged and is part of a run of appeals begun in the last decade, including one by the National Industry Confederation (CNI), against payment of tax on earnings on foreign operations.

Brazil’s government is also seeking $3 billion in additional royalty payments from Vale, claiming the company has understated the value of its production. Switzerland’s government is also pursuing the company for income tax arrears that Vale disputes.

Key Brazilian mining state Minas Gerais state is seeking an 1.2 billion reais (US$642.83 million) in additional tax from the company, saying Vale should have based its tax payments on the value of its output, not production costs.

($1 = 1.9265 Brazilian reals)

Reporting by Peter Murphy; Editing by Jeb Blount, Gary Hill

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