May 31, 2019 / 1:49 PM / a year ago

Fast-growing Brazil grain trader Gavilon faces tax audit - sources

SAO PAULO, May 31 (Reuters) - Commodities trader Gavilon do Brasil, a subsidiary of Japanese conglomerate Marubeni Corp , is being audited by Brazilian tax authorities, according to two people who asked for anonymity to discuss the confidential matter.

Two tax auditors appeared on May 17 at the Sao Paulo headquarters of Brazil’s fastest-growing soy trader, one of the sources said, adding that the auditors are reviewing Gavilon’s accounting going back to 2016.

The second source said the audit is related to tax rebates to which Gavilon is entitled as a large exporter, but declined to elaborate.

U.S.-based Gavilon Agriculture Investment Inc, of which Gavilon do Brasil is an indirect subsidiary, told Reuters that it would not comment on whether it was under audit. In a statement, it said that “tax-related audits are a normal part of business, and Gavilon monitors and responds to these inquiries a timely matter.”

The Brazilian federal revenue service declined to discuss the matter, citing tax secrecy rules.

The audit at Gavilon follows the departure of its former general manager and its country controller earlier this month, the second time this year that Gavilon had gone through management changes in Brazil. No replacement for the general manager has been announced, the second source said.

Gavilon’s representative in the United States said any ongoing and previous tax audits of Gavilon do Brasil “are not related to employment matters.”

Marubeni did not reply to a request for comment.

Given the special status of exporters under Brazilian tax law, it is not uncommon for big traders to get close scrutiny from tax authorities. The Brazilian unit of Cargill Inc in February won an appeal that canceled a tax fine of 10 billion reais ($2.51 billion) related to alleged irregularities in its grain export contracts.

Gavilon shipped 4.64 million tonnes of soybeans from Brazil in 2018, according to maritime services firm Cargonave, more than 20 times what it shipped just three years earlier.

The trader’s rapid growth has stiffened competition in the market amid strong Chinese demand for soybeans in the world’s largest exporter of the oilseed. Nearly 93 percent of the soy that Gavilon exported from Brazil last year was destined for China, according to Cargonave.

In an August interview, Gavilon do Brasil’s former general manager said the firm planned to be trading some 10 million tonnes of soybeans annually within three years. ($1 = 3.9825 reais) (Reporting by Ana Mano Editing by Brad Haynes and Jeffrey Benkoe)

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