TOKYO, June 29 (Reuters) - Japan's third-biggest auto maker, Honda Motor Co , said on Tuesday it had been ordered to pay 13 billion yen ($120 million) in additional tax on profits from its motorcycle operation in Brazil.
Honda said in a statement it had been told by Tokyo tax officials that its assessment of profits of transactions of a Brazilian subsidiary over six years to 2002 was too low.
Honda said it objected to the ruling and would seek consultations between the two countries based on a Tax Convention so as to preventing double taxation.
The Brazilian motorcycle manufacturing subsidiary, Moto Honda de Amazonia Ltda, produced about 820,000 units in the 2003 business year, of which 730,000 were sold in Brazil and the rest exported to 68 countries.
"Over a period of many years, Honda has made dedicated efforts to grow its local operation in Brazil, and the Taxation Bureau's allegation that the bulk of profits earned there must be allocated to Japan is totally unacceptable," it said.
Honda spokesman Sakae Uruma said it will pay the tax but then seek a solution to the issue, which he said could take five to 10 years.
Honda received a similar order from the nation's tax authorities over gains in the United States in 1978. It settled that case in 1985.
Prior to the announcement, shares in Honda ended Tokyo trade down 0.38 percent at 5,290 yen, against a 0.20 percent fall in the benchmark Nikkei average . ($1=108.03 Yen)