In an unexpected move, Brazilian tax appeals board CARF has held up a 2.7 billion reais tax assessment tied to the 2008 merger between Itaú and Unibanco that created Itaú Unibanco Holding SA, Valor Econômico reported.
The decision runs contrary to the Brazilian bank's own expectations for the tax assessment. In its 2017 annual report, the company said that its loss risks from merger-related tax assessments were "remote," particularly as the company previously had gained favorable rulings on similar disputes. In a 2017 ruling, CARF had ruled in favor of the bank on a tax assessment tied to purported capital gains from the merger.
However, the company had also faced a merger-related tax assessment charging some 1.44 billion reais in corporate income tax and 502.6 million reais of social contribution income tax, plus accrued interest and penalties. And while CARF had dismissed the company's voluntary appeal on that matter, Itaú had said that it believed its chance of winning the dispute was "more likely than not" in its annual report.
As of June 4, US$1 was equivalent to 3.75 Brazilian reais.
