Milan

Telecom Italia says subsidiary can win Brazilian tax dispute

Loss 'unlikely,' TI says

Telecom Italia says subsidiary can win Brazilian tax dispute

(ANSA) - Milan, August 21 - Telecom Italia says that it is "unlikely" that it will lose a tax dispute with authorities in Brazil involving its subsidiary there. In a statement, the company said it has precedent on its side in the tax dispute involving TIM Participacoes, which controls TIM Celular. The final decision on the company's appeal over the tax claim will come from Brazil's administrative tax appeals council, CARF, which has ruled in favour in similar appeals, explained the Italian telecoms giant. "For this reason, we consider it unlikely that we'll lose over the questions raised," TIM said in the statement. Last May, TIM Celular appealed a fine of nearly 1.3 billion Brazilian reais ($630 million) concerning alleged tax issues in the years 2006 to 2009. Telecom Italia was notified last year about the fine, which relates to a 2011 deal involving the acquisition and incorporation of TIM Nordeste into Telecom Italia's holdings. The tax dispute has cost the company dearly on stock markets. On Monday, Telecom Italia shares lost 3.64% on the day to close at 0.73 euros while its Brazilian unit, trading on the Bovespa exchange, closed 1.84% lower after plunging as much as 3.69% during the session. Investors aren't sure whether a fund has been set aside to pay the fine, if TIM loses, and if it hasn't, worry that the fine would hurt TIM's efforts to cut debt. "The flow of news continues to hurt TIM," analysts noted Monday. Earlier this month, Telecom Italia reported a net profit in the first half of the year, confirmed it would pay a dividend, and said it had liquidity to cover its debt payments through 2014. Telecom Italia ended the first six months of the year with a net profit of 1.245 billion euros, compared with a 2.042 billion euros loss in the same period last year.

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