Thu Mar 15, 2012 12:08am EDT
* Vale fighting four tax bills totaling nearly $17 bln
* Brazil claims double tax foreign operations, Vale says
* Decision suspends payment ruling pending final judgment
* Brazil top court says to rule on the case by Thursday (Adds Vale quote, supreme court ruling due, background)
BRASILIA, March 14 (Reuters) – Brazil’s Vale, the world’s second-largest mining company, said on Wednesday the Supreme Court of Justice had suspended an order for it to pay billions to Brazilian tax authorities in a double-taxation dispute over its international operations.
Vale is fighting four actions by the Brazilian Federal Revenue Service, which says it owes 30.5 billion reais ($16.8 billion). Vale says it has already paid this money to foreign governments and taxing the company again is an unfair burden.
The Brazilian federal tax claims against the iron ore miner amount to nearly three quarters of the company’s $22.9 billion profit in 2011 and nearly all of its 2010 profit.
Brazil’s Federal Supreme Court, the nation’s highest tribunal, was scheduled to rule on the case on Thursday, the court’s web site showed. The ruling on the case is likely to provide a strong signal to the outcome of another dispute with the government over $14 billion in mining royalties and other levies.
Four judges of the supreme court have ruled that the back taxes amount to double taxation, violating Brazil’s Constitution, the court said on its website. Another four justices ruled the tax legal but one more justice still needs to vote.
The Rio de Janeiro-based company, which has operations on six continents, says Brazil’s claim will deter companies from expanding operations abroad. Vale is the world’s largest producer of iron ore and expects to become the largest producer of nickel this year.
The Revenue Service wants the company to pay the following in taxes and penalties — 3 billion reais for the period of 1996 to 2002, 10.8 billion reais for the period of 2003 to 2006, 13.2 billion reais for 2007 and 3.5 billion reais for 2008.
Vale said this month it would deposit 1.6 billion reais with a judge against the first and smallest of the Revenue Service’s claims after having failed by that time to block a collection order. The latest ruling means it is no longer required to do that.
Vale preferred shares, the company’s most-traded class of stock, fell 1.2 percent to 41.10 reais in Sao Paulo on Wednesday. This year, Vale has lagged Brazil’s benchmark Bovespa index of the Sao Paulo stock exchange rising 8.67 percent while the Bovespa has jumped 20 percent. ($1=1.8182 Brazilian reais) (Reporting by Peter Murphy and Alonso Soto; Additional reporting by Guillermo Parra-Bernal in Sao Paulo; Editing by Clarence Fernandez and Jeb Blount)
* Vale fighting four tax bills totaling nearly $17 bln
* Brazil claims double tax foreign operations, Vale says
* Decision suspends payment ruling pending final judgment
* Brazil top court says to rule on the case by Thursday (Adds Vale quote, supreme court ruling due, background)
BRASILIA, March 14 (Reuters) – Brazil’s Vale, the world’s second-largest mining company, said on Wednesday the Supreme Court of Justice had suspended an order for it to pay billions to Brazilian tax authorities in a double-taxation dispute over its international operations.
Vale is fighting four actions by the Brazilian Federal Revenue Service, which says it owes 30.5 billion reais ($16.8 billion). Vale says it has already paid this money to foreign governments and taxing the company again is an unfair burden.
The Brazilian federal tax claims against the iron ore miner amount to nearly three quarters of the company’s $22.9 billion profit in 2011 and nearly all of its 2010 profit.
Brazil’s Federal Supreme Court, the nation’s highest tribunal, was scheduled to rule on the case on Thursday, the court’s web site showed. The ruling on the case is likely to provide a strong signal to the outcome of another dispute with the government over $14 billion in mining royalties and other levies.
Four judges of the supreme court have ruled that the back taxes amount to double taxation, violating Brazil’s Constitution, the court said on its website. Another four justices ruled the tax legal but one more justice still needs to vote.
The Rio de Janeiro-based company, which has operations on six continents, says Brazil’s claim will deter companies from expanding operations abroad. Vale is the world’s largest producer of iron ore and expects to become the largest producer of nickel this year.
The Revenue Service wants the company to pay the following in taxes and penalties — 3 billion reais for the period of 1996 to 2002, 10.8 billion reais for the period of 2003 to 2006, 13.2 billion reais for 2007 and 3.5 billion reais for 2008.
Vale said this month it would deposit 1.6 billion reais with a judge against the first and smallest of the Revenue Service’s claims after having failed by that time to block a collection order. The latest ruling means it is no longer required to do that.
Vale preferred shares, the company’s most-traded class of stock, fell 1.2 percent to 41.10 reais in Sao Paulo on Wednesday. This year, Vale has lagged Brazil’s benchmark Bovespa index of the Sao Paulo stock exchange rising 8.67 percent while the Bovespa has jumped 20 percent. ($1=1.8182 Brazilian reais) (Reporting by Peter Murphy and Alonso Soto; Additional reporting by Guillermo Parra-Bernal in Sao Paulo; Editing by Clarence Fernandez and Jeb Blount)
