Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Taxes are calculated at the rates shown below and consider, for effects of respective calculation bases, the legislation in force applicable to each charge.


Income tax	15.00	%
Additional income tax	10.00	%
Social contribution ^(*)	20.00	%

(*)

On october 06, 2015, Law No. 13,169, a conversion of Provisional Measure No. 675, which increased the Social Contribution tax rate from 15.00% to 20.00% until December 31, 2018, for financial institutions, insurance companies and credit card management companies, was introduced. For the other companies, the tax rate remains at 9.00%.

Demonstration of Income Tax and Social Contribution Expense

Demonstration of Income tax and social contribution expense calculation:


Due on operations for the period	01/01 to 12/31/2018			01/01 to 12/31/2017			01/01 to 12/31/2016
Income before income tax and social contribution		30,608			30,582			35,679
Charges (income tax and social contribution) at the rates in effect		(13,774	)		(13,762	)		(16,057	)
Increase / decrease in income tax and social contribution charges arising from:
Share of profit or (loss) of associates and joint ventures net		147			169			165
Foreign exchange variation on investiments abroad		4,381			397			(4,313	)
Interest on capital		3,791			3,873			3,617
Corporate reorganizations (Note 2.4 a IV)		628			628			628
Dividends and interest on external debt bonds		516			420			365
Other nondeductible expenses net of non taxable income ^(*)		1,747			3,736			11,697
Income tax and social contribution expenses		(2,564	)		(4,539	)		(3,898	)


Related to temporary differences
Increase (reversal) for the period		(2,650	)		(2,888	)		(9,827	)
Increase (reversal) of prior periods		245			70			62
(Expenses) / Income related to deferred taxes		(2,405	)		(2,818	)		(9,765	)

Total income tax and social contribution expenses		(4,969	)		(7,357	)		(13,663	)

(*)

Includes temporary (additions) and exclusions.

Summary of Deferred Tax Asset Balance and Respective Changes

I -

The deferred tax asset balance and its changes, segregated based on its origin and disbursements, are represented by:


	12/31/2017		Realization / Reversal			Increase		12/31/2018
Reflected in income		48,810		(23,511	)		11,953		37,252
Provision for expected loss		24,686		(9,746	)		3,623		18,563
Related to tax losses and social contribution loss carryforwards		7,595		(3,649	)		445		4,391
Provision for profit sharing		1,829		(1,829	)		1,844		1,844
Provision for devaluation of securities with permanent impairment		2,228		(1,843	)		1,344		1,729
Provision		5,194		(2,124	)		1,394		4,464

Civil lawsuits		1,974		(610	)		222		1,586
Labor claims		2,200		(1,280	)		1,117		2,037
Tax and social security		1,020		(234	)		55		841
Goodwill on purchase of investments		141		(163	)		82		60
Legal liabilities		488		(61	)		249		676
Adjustments of operations carried out on the futures settlement market		277		(277	)		98		98
Adjustment to Fair Value of Financial Assets - At Fair Value Through Profit or Loss		429		(429	)		631		631
Provision related to health insurance operations		341		(5	)		7		343
Other		5,602		(3,385	)		2,236		4,453
Reflected in stockholders’ equity		2,192		(785	)		481		1,888
Corporate reorganizations (Note 2.4 a IV)		628		(628	)		—		—
Adjustment to Fair Value of Financial Assets - At Fair Value Through Other Comprehensive Income		327		(157	)		213		383
Cash flow hedge		983		—			166		1,149
Other		254		—			102		356

Total ⁽¹⁾⁽²⁾		51,002		(24,296	)		12,434		39,140

(1)

Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 32,781 and R$ 447, respectively.

(2)

The accounting records of deferred tax assets on income tax losses and/or social contribution loss carryforwards, as well as those arising from temporary differences, are based on technical feasibility studies which consider the expected generation of future taxable income, considering the history of profitability for each subsidiary individually, and for the consolidated taken as a whole.


	12/31/2016		Realization / Reversal			Increase		12/31/2017
Reflected in income		49,841		(16,347	)		15,316		48,810
Provision for expected loss		27,510		(9,453	)		6,629		24,686
Related to tax losses and social contribution loss carryforwards		6,981		(197	)		811		7,595
Provision for profit sharing		1,541		(1,541	)		1,829		1,829
Provision for devaluation of securities with permanent impairment		1,727		—			501		2,228
Provision		5,704		(2,733	)		2,223		5,194

Civil lawsuits		1,955		(576	)		595		1,974
Labor claims		2,167		(1,233	)		1,266		2,200
Tax and social security		1,582		(924	)		362		1,020
Goodwill on purchase of investments		165		(758	)		734		141
Legal liabilities		387		(557	)		658		488
Adjustments of operations carried out in futures settlement market		485		(239	)		31		277
Adjustment to Fair Value of Financial Assets - At Fair Value Through Profit or Loss		243		(243	)		429		429
Provision related to health insurance operations		300		—			41		341
Other		4,798		(626	)		1,430		5,602
Reflected in stockholders’ equity		3,123		(1,072	)		141		2,192
Corporate reorganizations (Note 2.4 a IV)		1,256		(628	)		—		628
Adjustment to Fair Value of Financial Assets - At Fair Value Through Other Comprehensive Income		771		(444	)		—		327
Cash flow hedge		843		—			140		983
Other		253		—			1		254

*Total ^()**		52,964		(17,419	)		15,457		51,002

(*)

Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 35,869 and R$ 391, respectively.

II -

The provision for deferred tax and contributions and respective changes are as follows:


	12/31/2017		Realization / reversal			Increase		12/31/2018
Reflected in income		14,569		(11,385	)		2,960		6,144
Depreciation in excess – finance lease		613		(267	)		—		346
Adjustment of escrow deposits and provisions		1,280		(11	)		79		1,348
Post-employment benefits		304		(143	)		126		287
Adjustments of operations carried out on the futures settlement market		1,421		(1,421	)		923		923
Adjustment to Fair Value of Financial Assets - At Fair Value Through Profit or Loss		7,592		(7,592	)		1,790		1,790
Taxation of results abroad – capital gains		1,973		(1,314	)		—		659
Other		1,386		(637	)		42		791
Reflected in stockholders’ equity		955		(311	)		18		662
Adjustment to Fair Value of Financial Assets - At Fair Value Through Other Comprehensive Income		767		(302	)		9		474
Cash flow hedge		166		—			2		168
Post-employment benefits		9		(9	)		7		7
Other		13		—			—		13

*Total ^()**		15,524		(11,696	)		2,978		6,806

(*)

Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 32,781 and R$ 447, respectively.


	12/31/2016		Realization / reversal			Increase		12/31/2017
Reflected in income		13,507		(8,716	)		9,778		14,569
Depreciation in excess – finance lease		936		(323	)		—		613
Adjustment of escrow deposits and provisions		1,193		(179	)		266		1,280
Post-employment benefits		233		—			71		304
Adjustments of operations carried out on the futures settlement market		1,095		—			326		1,421
Adjustment to Fair Value of Financial Assets - At Fair Value Through Profit or Loss		7,293		(7,293	)		7,592		7,592
Taxation of results abroad – capital gains		1,502		—			471		1,973
Other		1,255		(921	)		1,052		1,386
Reflected in stockholders’ equity		968		(129	)		116		955
Adjustment to Fair Value of Financial Assets - At Fair Value Through Other Comprehensive Income		836		(82	)		13		767
Cash flow hedge		63		—			103		166
Post-employment benefits		35		(26	)		—		9
Other		34		(21	)		—		13

*Total ^()**		14,475		(8,845	)		9,894		15,524

(*)

Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 35,869 and R$ 391, respectively.

Summary of Realization and Present Value of Tax Credits and From Provision for Deferred Income Tax and Social Contribution

III -

The estimate of realization and present value of tax credits and from the Provision for Deferred Income Tax and Social Contribution existing at 12/31/2018, are:


Year of realization	Deferred tax assets															Deferred tax liabilities			%			Net deferred taxes		%
Year of realization	Temporary differences		%			Tax loss / social contribution loss carryforwards		%			Total		%			Deferred tax liabilities			%			Net deferred taxes		%
2019		10,808		31	%		1,394		32	%		12,202		31	%		(1,333	)		20	%		10,869		33	%
2020		12,961		38	%		751		17	%		13,712		35	%		(1,258	)		18	%		12,454		39	%
2021		4,575		13	%		614		14	%		5,189		13	%		(432	)		6	%		4,757		15	%
2022		813		2	%		395		9	%		1,208		3	%		(1,069	)		16	%		139		0	%
2023		685		2	%		157		3	%		842		2	%		(142	)		2	%		700		2	%
After 2023		4,907		14	%		1,080		25	%		5,987		16	%		(2,572	)		38	%		3,415		11	%
Total		34,749		100	%		4,391		100	%		39,140		100	%		(6,806	)		100	%		32,334		100	%

*Present value ^()**		31,526					3,859					35,384					(5,735	)					29,649

(*)

The average funding rate, net of tax effects, was used to determine the present value.

Summary of Tax Liabilities

c) Tax liabilities


	12/31/2018		12/31/2017
Taxes and contributions on income payable		615		1,752
Other Taxes and Contributions payable		1,443		1,423
Provision for deferred income tax and social contribution (Note 24b II)		447		391
Other		2,779		4,270

Total		5,284		7,836