Vale (VALE, quote) has received an unfavorable decision and now faces a back tax bill amounting to BRL 9.8 billion ($5.6 billion), plus interest and penalties.
The case relates the way Vale paid tax on its foreign subsidiaries’ profits.
In addition to this assessment, the mining company is facing three more charges for the same reason, according to a company report sent to the United States regulator SEC.
Together, these actions can mean a loss of BRL 26.7 billion ($15.3 billion) to VALE, the equivalent of 12% of the company’s market value.
Vale said it will appeal the decision on administrative and judicial courts and will not pay the charges until the trial on the merits.
The company argues that since 2003, it has been following Executive Act No. 2158/2001, which determines the payment of Brazilian income tax and “social contribution on net income” on the profits of foreign subsidiaries.