Brazil mining giant slapped with $1.86bn tax fine

By James Barnes

09 January 2013 at 12:28 BST

A Brazilian mining company owned by one of the richest men in Latin America was hit with a $1.86 billion fine for unpaid taxes yesterday -- the equivalent to about 80 per cent of its market value.

Brasilia: taxman guns for mining company

Brasilia: taxman guns for mining company

MMX claimed it would challenge the penalty – which is four times larger than the company’s estimated sales last year -- stating in had no legal basis, reports the Financial Times newspaper in London.

Iron ore

MMX was founded by billionaire Eike Batisa who -- according to last year’s Forbes list -- is the richest man in Brazil and the seventh richest man in the world with a net worth of $30bn.
According to the report, Brazil’s authorities have imposed the fine for unpaid income taxes and social security contributions dating back to 2007. In a statement, MMX added that the fine relates to a plan by London-headquartered mining company Anglo American to increase its stake in MMX’s Minas-Rio iron ore business. It is reported that the Brazilian taxman is also claiming back taxes on gains arising from share sales between companies that indirectly control MMX.

Totally unfounded

‘MMX and the company’s independent legal advisers consider the charges to be totally unfounded, understanding that at the end of the process, they should be rejected,’ the company said.
MMX has 30 days to launch an appeal, but its shares have already halved in value since their peak last February.
Brazilian cosmetics group Natura was also charged $380 million in back taxes yesterday, while mining company Vale and even state-run Petrobras have also been targeted.
Sao Paulo firm Angelini Caraciolo De Faro & Gregorio is understood to be acting for the mining company.


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