Brazil's federal tax office has introduced new tax measures on sales carried out by Brazilian miners and steel producers to overseas subsidiaries, according to media reports.
According to the new tax regulations, Brazilian producers such as Vale and CSN will have to sell commodity products including iron ore and steel slabs at international market prices to their overseas subsidiaries, to prevent tax evasion caused by current intercompany pricing practices.
Vale's overall tax burden is expected to rise by as much as five percent with the new measure, according to the reports, since exports account for 85 percent of Vale's total output, and also as almost all of its exports are sold via overseas subsidiaries. CSN likewise sells almost all its iron ore and steel slab exports on an intercompany basis.