| 18 | Income tax and social contribution |
| 18.1 | Reconciliation of income tax and social contribution expense |
| |
For the nine-month period ended
September 30, | |
| |
2022 | | |
2021 | |
Earnings before income tax and social contribution | |
| 912 | | |
| 1,436 | |
Expense of income tax and social contribution | |
| (310 | ) | |
| (488 | ) |
Adjustments to reflect the effective rate | |
| | | |
| | |
Tax fines | |
| (1 | ) | |
| (1 | ) |
Share of profits | |
| 12 | | |
| 14 | |
Interest on equity | |
| - | | |
| 22 | |
ICMS subsidy - tax incentives (i) | |
| 176 | | |
| - | |
Interest selic credits | |
| - | | |
| 81 | |
Current period credit | |
| 25 | | |
| - | |
Tax benefits | |
| - | | |
| 19 | |
Effective income tax | |
| (98 | ) | |
| (353 | ) |
Income tax and social contribution for the period | |
| | | |
| | |
Current | |
| (74 | ) | |
| (385 | ) |
Deferred | |
| (24 | ) | |
| 32 | |
Income tax and social contribution expenses | |
| (98 | ) | |
| (353 | ) |
Effective rate | |
| 10.7 | % | |
| 24.6 | % |
| (i) | The Company has tax benefits that are characterized as investment
subsidies as provided for in Complementary Law n° 160/17 and Law n°. 12,973/14. In the nine-month period ended September 30,
2022, the Company excluded the IRPJ and CSLL calculation bases from the amount constituted in the tax incentive reserve (see note19.4). |
| 18.2 | Breakdown of deferred income tax and social contribution |
The main components of deferred income tax
and social contribution in the balance sheets are the following:
| |
As of | |
| |
As of September 30, 2022 | | |
December 31, 2021 | |
| |
Assets | | |
Liabilities | | |
Net | | |
Assets | | |
Liabilities | | |
Net | |
Deferred income tax and social contribution | |
| | |
| | |
| | |
| | |
| | |
| |
Tax losses | |
| 155 | | |
| - | | |
| 155 | | |
| 167 | | |
| - | | |
| 167 | |
Provision for legal proceedings | |
| 42 | | |
| - | | |
| 42 | | |
| 59 | | |
| - | | |
| 59 | |
Exchange rate variation | |
| - | | |
| (16 | ) | |
| (16 | ) | |
| - | | |
| (7 | ) | |
| (7 | ) |
Goodwill tax amortization | |
| - | | |
| (317 | ) | |
| (317 | ) | |
| - | | |
| (317 | ) | |
| (317 | ) |
Fair value adjustment | |
| - | | |
| (23 | ) | |
| (23 | ) | |
| 1 | | |
| - | | |
| 1 | |
Property, plant and equipment, intangible and investment properties | |
| 33 | | |
| - | | |
| 33 | | |
| 33 | | |
| - | | |
| 33 | |
Unrealized gains with tax credits | |
| 4 | | |
| - | | |
| 4 | | |
| - | | |
| (28 | ) | |
| (28 | ) |
Cash flow hedge | |
| - | | |
| (39 | ) | |
| (39 | ) | |
| - | | |
| (26 | ) | |
| (26 | ) |
Lease net of right of use | |
| 120 | | |
| - | | |
| 120 | | |
| 150 | | |
| - | | |
| 150 | |
Provision for restructuring | |
| 12 | | |
| - | | |
| 12 | | |
| - | | |
| - | | |
| - | |
Provision of inventory | |
| 12 | | |
| - | | |
| 12 | | |
| 15 | | |
| - | | |
| 15 | |
Others | |
| 40 | | |
| - | | |
| 40 | | |
| - | | |
| (2 | ) | |
| (2 | ) |
Gross deferred income tax and social contribution assets (liabilities) | |
| 418 | | |
| (395 | ) | |
| 23 | | |
| 425 | | |
| (380 | ) | |
| 45 | |
Compensation | |
| (395 | ) | |
| 395 | | |
| - | | |
| (380 | ) | |
| 380 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net deferred income tax and social contribution assets (liabilities), net | |
| 23 | | |
| - | | |
| 23 | | |
| 45 | | |
| - | | |
| 45 | |
Management has assessed the future realization
of deferred tax assets, considering the projections of future taxable income, in the context of the main variables of its businesses.
This assessment was based on information from the strategic planning report approved by the Company’s Board of Directors. The Company estimates the recovery of the
deferred tax assets as of September 30, 2022 as follows:
Years | |
Amounts | |
Up to 1 year | |
| 74 | |
From 1 year to 2 years | |
| 202 | |
From 4 years to 5 years | |
| 5 | |
More than 5 years | |
| 137 | |
| |
| 418 | |
| |
As of | |
| |
September 30,
2022 | | |
December 31,
2021 | |
At the beginning of the period | |
| 45 | | |
| (82 | ) |
Benefits (expenses) in the period | |
| (24 | ) | |
| 127 | |
Tax over other comprehensive income | |
| 1 | | |
| - | |
Others | |
| 1 | | |
| - | |
At the end of the period | |
| 23 | | |
| 45 | |
|