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Group Profile | Businesses |
Litigation
| Risk Factors
Actions Related to the ICMS Tax
GVT, like all other telecommunications operators, is party in several
Brazilian States to various proceedings concerning the application of the
“ICMS” tax (
Imposto Sober Circulação de Mercadorias e Prestação de
Serviços
), which is a tax on operations relating to the circulation of goods
and the supply of transport, communication and electricity services.
GVT is notably a party to litigation in various Brazilian States concerning
the application of the ICMS tax on voice telecommunication services.
GVT argues that the ICMS tax should not apply to monthly plans. Of the
21 proceedings initiated by GVT, all have resulted in decisions favorable
to GVT and 12 are no longer subject to appeal.
Actions Related to the FUST and FUNTTEL Taxes in Brazil
The Brazilian tax authorities argue that the assessment of the
taxes known as “FUST” (Fundo da Universalização dos Serviços
de Telecomunicações), a federal tax to promote the supply of
telecommunications services throughout the whole Brazilian territory,
including in areas that are not economically viable, and “FUNTTEL”
(
Fundo para Desenvolvimento Tecnológioco das Telecomunicações
),
a federal tax to finance technological investments in Brazilian
telecommunications services, should be based on the company’s gross
revenue without deduction for price reductions or interconnection
expenses and other taxes, which would lead to part of that sum being
subject to double taxation. GVT is challenging this interpretation and
has secured a suspension of payment of the sums claimed by the tax
authority from the federal judge.
Proceedings Brought against
Telecommunications Operators in Brazil
Regarding the Application of the PIS and COFINS taxes
Several proceedings were initiated against all the telecommunications
operators in Brazil, including GVT, seeking to prevent invoices from
being increased by taxes known as “PIS” (
Programa de Integração
Social
) and “COFINS” (
Contribuição para Financiamento da Seguridade
Social
), which are federal taxes that apply to revenue from the provision
of telecommunications services. GVT believes that the arguments in its
defense have a stronger basis than those of the historic operators i as
GVT operates pursuant to a more flexible license that allows it to set its
own tariffs.
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Annual Report 2014