Rio prosecutors investigate tax breaks for ThyssenKrupp plant

SAO PAULO (Reuters) - Rio de Janeiro prosecutors opened a criminal investigation to evaluate the legality of tax breaks given to German steel group ThyssenKrupp AG (TKAG.DE) by Rio's city and state governments, the prosecutor's office said on Wednesday.

The investigation aims to find out whether or not Rio authorities broke laws regarding the concession of fiscal incentives to ThyssenKrupp large steel slab plant built in Rio, the Companhia Siderurgica do Atlantico (CSA).

The plant is already a target of a lawsuit trying to block the granting of an operating license to the plant until a thorough environmental assessment is conducted.

ThyssenKrupp had no immediate comment.

In a statement, the prosecutor general's office said CSA received generous tax breaks both from the state and the city of Rio de Janeiro that hurt public revenues.

It questions if the installation should have had access to the incentives since it has yet to obtain a definitive operating license, a legal requirement for concession of tax breaks.

ThyssenKrupp has been the sole owner of CSA since April, when Vale SA (VALE5.SA) transferred its stake for a token sum, allowing the German company to possibly relaunch a sale process.

The plant in Rio de Janeiro state cost ThyssenKrupp and Vale $10 billion (£7.69 billion) to build in the 2000s and was Brazil's most expensive foreign investment project.

(Reporting by Rodrigo Viga Gaier; Writing by Marcelo Teixeira; editing by Grant McCool)