BRASILIA (Reuters) - Companies from Brazilian state oil company Petróleo Brasileiro SA to commodities giant Louis Dreyfus Company and German car giant Volkswagen AG (VOWG_p.DE) could face hefty bills after Brazil’s Supreme Court this month allowed local governments to charge property taxes to operators of public concessions.
The ruling settled an 18-year old spat between Petrobras (PETR4.SA), as the state-controlled oil company is known, and the city of Santos, home of Brazil’s busiest container port.
Even though Petrobras does not own the terminal, and only operates it under a concession, the court ruled that it was liable to pay tax on the property.
Now Santos is demanding the oil giant and other terminal operators pay an estimated 300 million reais ($85.5 million) in back taxes and foot an annual tax bill that could total 13 million reais a year.
“This will have ramifications throughout Brazil,” Santos mayor Paulo Barbosa told Reuters in an interview. “Any port city - every city that is home to any concessions - may now charge property taxes on them.”
Property taxes in Brazil are set at the city level and usually hover around 1.5 percent of property values.
Santos could become the first of many regional governments to seek redress from operators of everything from ports and highways to airports as a slower-than-expected economic recovery in Latin America’s largest economy has made authorities desperate for tax revenues.
Though the annual value of tax payments going forward may be small, at an annual average of around 200,000 reais ($57,136) per terminal in Santos, the city government wants to collect back taxes