Vale will pay $232 million in taxes to Switzerland
Brazilian miner Vale SA (NYSE:VALE) said Wednesday its fourth-quarter results would suffer after the company decided to settle a case of alleged tax evasion with Swiss authorities.
Vale will pay a bit over $232 million to Switzerland, after provisioning $37 million, the company said in a statement.
The now settled dispute, which dragged Vale’s shares down last year, was related to a tax agreement Vale reached in 2006 with the Swiss government in exchange for establishing a local branch in the Vaud region.
The company said the conflict was due to “differences in the interpretation of tax breaks granted to the company in 2006,” adding that those tax exemptions have been renewed until 2015.
Last week the mining giant said it had started paying the Brazilian government $674 million ($1.4 billion real) in yet another dispute over mining royalties.
The company is caught in a 10-year-old dispute with Brazil’s federal government over tax payments owed, but has agreed to pay three instalments of 100 million reais before the end of 2012 and a single payment of 1.1 billion reais next year.
Vale's earnings have been hit especially hard by the sharp drop in iron ore prices this year, resulting from China's easing economic growth and the resulting weak demand for the steel-making ingredient.
The Brazilian company is the world’s largest iron ore producer. The company is also responsible for over a quarter of global sea-borne iron ore exports.
Image courtesy of Rajiii – Creative Commons