Brazilian tax authorities demand 3 billion from Unilever

Unilever faces a total tax claim of nearly three billion euros in Brazil. Allegedly, the British group has evaded taxes in the country through various constructions.

Restructuring

The biggest claim, involving over two billion euros, relates to the restructuring of the Brazilian branch, Dutch newspaper NRC reports. Between 1999 and 2004, Unilever sold more than a thousand small brands worldwide. However, in Brazil, it made a series of acquisitions, which the food group incorporated into Unilever Brasil in 2001.

According to the Brazilian tax authorities, this operation served no business purpose but was merely set up to avoid taxes. Initially, the court ruled in favour of Unilever, but in 2013 the tax authorities filed a new case. The claim, which amounted to half a billion euros initially, has now risen to more than two billion euros. A final judgment in the case is not expected in the near future, the company says.

Takeover

In addition to the restructuring dispute, Unilever is also embroiled in several smaller tax lawsuits in Brazil, which in the worst case could cost the company more than 800 million euros. At the beginning of last year, the FMCG giant lost a case, brought to a higher court, concerning a claim of 137 million euros. The judge ruled that the acquisition of Unilever Brasil Alimentos by the Brazilian branch of the group was merely done to avoid taxes.

In a reaction to Dutch news channel NU.nl, Unilever states that it “is trying to pay the appropriate taxes on the profits we make and in the countries where we create the value that enables those profits”. The company would not comment further on the ongoing litigation.