Vale said that it decided to adhere to the new legislation on the value added tax on services and circulation of goods recently enacted by the Brazilian state of Minas Gerais Law 20.540 and Decree 46.110.
Therefore, the existing legal proceedings described in Vale's annual report Form 20-F will cease.
Additionally, there will be no new tax assessments related to the utilization of market value versus cost of production as the base for ICMS taxation on interstate movement of mineral products.
The existing legal proceedings, relative to 2006 and 2007, involve tax assessments of BRL 2.1 billion, will be terminated with the payment of BRL 168 million in 2012. Furthermore, new tax assessments referring to 2008-2012 will be avoided with the payment of BRL 495 million, of which BRL 92 million in 2012 and BRL 403 million over the next couple of years.
Given an existing provision of BRL 135 million, Vale’s financial statement for the Q4 of 2012 will suffer a negative impact of BRL 528 million. The effect on cash flow will reach BRL 260 million in 4Q12 and BRL 403 million in 2013-2014.
