Vale case could change the way Brazil taxes foreign profits
22 March 2012
A tax dispute involving the world’s second largest mining company, Vale, and the Brazilian Federal Revenue Service (RFB), could overhaul Brazil’s approach to the taxation of overseas profits.
The RFB is pursuing Vale for more than R$27 billion ($14.84 billion) in taxes, including interest and penalties, for assessments on profits of its foreign subsidiaries and affiliates carried out between 1996 and 2008.
Last week, the Superior Court of Justice (STJ) suspended a lower court ruling and granted Vale a temporary restraining order against all payment demands made by RFB and suspended the requirement to post bond with the court to continue contesting the assessments.
It is uncertain when the final STJ judgement will be made, as the ruling, in connection with other pending cases, could significantly alter Brazil’s rules for taxing foreign earnings.
“The Vale case has received a lot of attention because of the high amounts and...
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