Brazil strikes foreign tax deal with companies - report

Reuters

SAO PAULO (Reuters) - Brazil's government has reached a deal with big local companies on how to tax their foreign profits, a measure that should help resolve 70 billion reais (19.8 billion pounds) in tax disputes and help encourage greater investment abroad, Folha de S.Paulo newspaper reported on Saturday.

The deal should give a boost to tax collection of several billion reais, Folha said, at a time when the government is struggling to meet its fiscal savings goal for 2013.

The companies affected are some of Brazil's biggest including miner Vale SA (SAO:VALE5), state oil company Petroleo Brasileiro SA (SAO:PETR4) and steelmaker Gerdau SA (SAO:GGBR4).

The deal will allow the companies to enter a special renegotiation of tax debts the government said they owed for profits earned outside Brazil. Going forward, the companies will be allowed to set up holding companies to process foreign earnings as long as they are reported transparently and not based in so-called tax paradises, Folha said.

Brazil has one of the world's most complex taxation systems, according to the World Bank, and companies frequently dispute the government's accounting of what they owe.

The finance ministry did not immediately respond to a request for comment.

(Reporting by Brian Winter; editing by Jackie Frank)

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