Seeking Alpha

Vale (VALE -2.6%) shares tumbled in afternoon trading after Brazil's Supreme Court declared only...

Vale (VALE -2.6%) shares tumbled in afternoon trading after Brazil's Supreme Court declared only a partial end to double taxation of foreign units of Brazilian companies. The ruling seems to leave in question a 30.5B real ($15.4B) tax liability Vale disputes as improper double taxation.
From other sites
Comments (1)
  • petergrt
    , contributor
    Comments (461) | Send Message
    Now I understand what they teach in journalism schools - every story I read about the matter is completely devoid of pertinent facts:


    So here it goes:


    1. The Court ruled as unconstitutional retroactive application of the 2001 law, which immediately voids any perceived VALE's tax liability from 1996 to 2001 - a very large number albeit not yet quantified.


    2. The court ruled that no additional taxation can be .imposed on overseas profits unless those were made through divisions located within what Brazil defines as 'Tax Havens'. Vale has no such operations (according to its spokesman).


    2. Additional taxation of foreign profits made within countries within which Brazil has tax treaties must be dealt with on a case-by case bases.


    It is that last point that stands in the way of declaring the ruling a 100% in favor of Vale, as it injects some 'gray matter' and possible additional litigation.


    On the whole however, this was a major win for VALE indeed.


    Have been long on VALE for awhile, and have just added a bunch more, and will add further if the stock dips more.
    11 Apr 2013, 12:03 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs