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COMMITMENTS AND CONTINGENCIES | 3 Months Ended
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Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Matters The Company is involved, from time to time, in various litigation, administrative and other legal proceedings, including regulatory actions, incidental or related to its business, including consumer class or collective actions, personal injury (mostly involving allegations related to alleged asbestos in the Company’s talc-based cosmetic products), intellectual property, competition, compliance and advertising claims litigation and disputes, among others (collectively, “Legal Proceedings”). While the Company cannot predict any final outcomes relating thereto, management believes that the outcome of current Legal Proceedings will not have a material effect upon its business, prospects, financial condition, results of operations, cash flows or the trading price of the Company’s securities. However, management’s assessment of the Company’s current Legal Proceedings is ongoing, and could change in light of the discovery of additional facts with respect to Legal Proceedings not presently known to the Company, further legal analysis, or determinations by judges, arbitrators, juries or other finders of fact or deciders of law which are not in accord with management’s evaluation of the probable liability or outcome of such Legal Proceedings. From time to time, the Company is in discussions with regulators, including discussions initiated by the Company, about actual or potential violations of law in order to remediate or mitigate associated legal or compliance risks and liabilities or penalties. As the outcomes of such proceedings are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, prospects, financial condition, results of operations, cash flows or the trading price of its securities. Brazilian Tax Assessments The Company’s Brazilian subsidiaries receive tax assessments from local, state and federal tax authorities in Brazil from time to time. Current open tax assessments as of September 30, 2024 are:
Assessment received | Type of assessment | Type of Tax | Tax period impacted | Estimated amount, including interest and penalties as of September 30, 2024 |
Aug-20 | State sales tax credits, which the Treasury Office of the State of Goiás considers as improperly registered | ICMS | 2017-2019 | R$893.9 million (approximately $164.5) |
Oct-20 | Federal excise taxes, which the Treasury Office of the Brazil’s Internal Revenue Service considers as improperly calculated | IPI | 2016-2017 | R$443.6 million (approximately $81.6)
Nov-22 | IPI | 2018-2019 | R$600.4 million (approximately $110.5)
Mar-24 | IPI | 2020 | R$33.9 million (approximately $6.2)
Nov-20 | State sales taxes, which the Treasury Office of the State of Minas Gerais considers as improperly calculated | ICMS | 2016-2019 | R$229.3 million (approximately $42.2)
Jun-21 | State sales tax, which the Treasury Office of the State of Goiás considers as improperly calculated | ICMS | 2016-2020 | R$47.2 million (approximately $8.7)
For the Goiás State tax ICMS assessment received in August 2020, the Company has in parallel a judicial case about an additional claim for fees over the tax incentive, for which the Company received an unfavorable first instance ruling and has filed an appeal to the Court. In the second quarter of fiscal 2024, the Company filed appeals to be remitted to the Brazilian Superior Court of Justice and, in parallel, filed a motion to grant the suspension of the state's ability to collect the above tax incentives to the Goiás State Court as the case is under discussion. The motion to grant the suspension of the state’s ability to collect the above tax incentives was dismissed and, in the last quarter of fiscal 2024, a judge of the Superior Court of Justice ruled against the Company. The Company filed an interlocutory appeal for the full bench of judges on the Superior Court of Justice to review the case. The case was initially scheduled to be heard in the first quarter of the current fiscal year, but was rescheduled and is now scheduled to be heard by the Superior Court of Justice in the second quarter of the current fiscal year. The Company has been required to provide surety bonds of R$179.2 million (approximately $33.0) and cash deposits of R$141.6 million (approximately $26.0) as of September 30, 2024, to guarantee payment if the case is resolved against Coty. The cash deposits are included in the Other Noncurrent Assets on the Condensed Consolidated Balance Sheet. The Minas Gerais State tax ICMS assessment received in November 2020 is currently at the judicial process. The Company has been required to provide surety bonds of R$311.9 million (approximately $57.4) as of September 30, 2024, to guarantee payment if the case is resolved against Coty. All other cases are currently in the administrative process. The Company expects that cases may move from the administrative to the judicial process in case Coty does not receive a favorable decision at the administrative level, although the exact timing is uncertain. For cases in the judicial process, the Company will be required to make a judicial deposit or enter into a surety bond for the disputed tax assessment, interest and penalties. The judicial process in Brazil is likely to take a number of years to conclude. The Company is seeking favorable judicial and administrative decisions on the tax enforcement actions filed by the tax authorities for these assessments. The Company believes it has meritorious defenses and it has not recognized a loss for these assessments as the Company does not believe a loss is probable.

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