BRASILIA, Oct 19: Brazil’s multinational companies will have up to eight years to pay taxes on their foreign profits, the country’s top tax official said on Friday, in a rule that will encourage the growth of their investments abroad.

Brazilian companies will be allowed to compensate profits and losses between their foreign subsidiaries for four years, Federal Revenue Secretary Carlos Alberto Barreto said.

Companies based in tax havens will not benefit from the new rules, he told a press conference. The companies affected are some of Brazil’s biggest including miner Vale SA, state oil company Petroleo Brasileiro SA and steelmaker Gerdau SA.

In a deal, the companies will be allowed to pay back taxes on their foreign profits in instalments, which should help resolve a dispute over taxes owed on their operations abroad, which Barreto estimated at between 70bn and 100bn reais.

Companies that pay up front will not be charged fines and interest on the tax debts. Barreto said the tax rate applied to foreign profits and dividends will be maintained at 34 per cent.

President Dilma Rousseff will enact the rules in a provisional law that Congress will have 120 days to modify or approve. —Reuters