Vale Wins Appeal Against Tax Claims on Overseas Profit

Vale SA (VALE5) won an appeal against government tax claims, paving the way for the world’s biggest iron-ore miner to seek a rebate from a $10 billion settlement with the Brazilian government.

Brazil’s Superior Justice Tribunal justices voted 3-1 in a session in Brasilia today to grant Vale an appeal against taxes the government claims for profit from overseas units in 2002 and 2013. Vale rose as much as 2.9 percent in Sao Paulo trading after the ruling to close 1.6 percent higher at 28.15 reais.

The ruling revives Vale’s decade-long dispute against the levies claimed by Brazil that led the company to pay 22.3 billion reais ($10 billion) in a settlement for the 2003-2012 period in November. Vale counsel Clovis Torres said April 17 that backing for the appeal would lead the company to seek a rebate from the settlement.

“We will discuss whether we will ask for money back from payments we already made, if we are going to ask to suspend installments payments,” Vale’s tax affairs director, Octavio Bulcao, said after the ruling in Brasilia. “So far it’s too soon to say what we will do.”

Vale Chief Executive Officer Murilo Ferreira said Nov. 27 that a favorable decision could allow the company to suspend payments on the settlement and seek rebates for payments it has already made.

The Brazilian government can still appeal the decision at the Supreme Federal Tribunal, or STF, the country’s highest court. The Superior Tribunal, or STJ, is the second highest.

Government Appeal

“We will have to evaluate but we have the possibility to appeal in the STJ and also in the STF,” Finance Ministry prosecutor Joao Batista said.

While the ruling is positive for Vale, the government may still find new ways of making the company pay additional taxes, said Andreas Bokkenheuser, an equity analyst at UBS AG with a neutral recommendation on Vale shares.

“We worry that if the courts ultimately rule in favor of Vale, the government may find another way to increase state revenues,” he said in e-mailed comments. “The potential downside is that the overhang risk returns.”

To contact the reporters on this story: Mario Sergio Lima in Brasilia Newsroom at; Juan Pablo Spinetto in Rio de Janeiro at

To contact the editors responsible for this story: James Attwood at Carlos Caminada, Jasmina Kelemen

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