The Brazilian Congress approved the reduction of billions of dollars worth of tax debt of big companies’ profit from their foreign units in a move that may benefit Vale SA. (VALE3)
Senators yesterday approved a regulation that scraps fines and interest if companies pay their debts in one tranche and reduces taxes and interest should they pay their debts in installments. The lower house voted the same on Monday, so the text now goes to president Dilma Rousseff for final signing.
“This is very important to boost Brazilian companies,” Senator Gim Argello, sponsor of the bill, said yesterday in a phone interview from Brasilia. “In a time of crisis, government should give up on tax collection so that companies can generate more profit abroad.”
According to Valor Economico newspaper, the tax debt from companies foreign units amount to 70 billion reais ($30.8 billion). Mining giant Vale’s debt is 30.5 billion reais. “If companies decide to pay in one installment, this means that their debt will be reduced to 20 percent of the full amount.” Argello said.
Vale said it still hasn’t said whether it will accept the new rules to negotiate its debt and it has until the Nov. 29 deadline to decide and inform the government.
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