Brazil Court Majority Backs Foreign Profits Tax in Vale Case
Six justices have backed taxing profits that Brazilian groups earn through subsidiaries abroad. The foreign profits tax vote closes on 28 August 2026. The post Brazil Court Majority Backs Foreign Profits Tax in Vale Case appeared first on The Rio Times .
A majority of Brazil's Supreme Court has approved taxing foreign profits of overseas subsidiaries, according to a ruling in the Vale case. The vote came during a virtual session closing on August 28, 2026. The Supremo Tribunal Federal (STF) is adjudicating Recurso Extraordinário 870.214, an extraordinary appeal brought by the federal government against Vale.
The court is voting online, with justices posting their votes instead of meeting in-person. The presiding justice, André Mendonça, argued that the dispute lies in regular law rather than the Constitution. The outcome will influence but not automatically apply to other foreign profits tax disputes. The case centers on Article 74 of Medida Provisória (MP) 2.158-35 of 2001, which taxed corporate income tax and social contribution on net profit.
Congress revoked Article 74 in 2014, but the dispute persists. Brazil has double taxation agreements with multiple countries, which dictate taxing rights. Article 98 of the Brazilian tax code prioritizes tax treaties over ordinary tax law. The Receita Federal values this case at R$22 billion (US$4.26 billion), covering one year of unpaid tax and refunds for previous years. Vale has not published its own figure.
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