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Note 12 - Income Tax and Social Contribution | 12 Months Ended
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Dec. 31, 2017
Statement Line Items [Line Items] |
Disclosure of income tax and social contribution [text block] |
12. | INCOME TAX AND SOCIAL CONTRIBUTION
Income taxes reported in the income statement are analyzed as follows:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Income tax expense - current |  |  | (5,332.3 | ) |  |  | (413.9 | ) |  |  | (1,227.8 | )
Deferred tax expense on temporary differences |  |  | 891.9 |  |  |  | (732.5 | ) |  |  | (2,192.4 | )
Deferred tax over taxes losses carryforwards movements in the current period |  |  | (638.9 | ) |  |  | 831.4 |  |  |  | (214.0 | )
Total deferred tax (expense)/income |  |  | 253.0 |  |  |  | 98.9 |  |  |  | (2,406.4 | )
Total income tax expenses |  |  | (5,079.3 | ) |  |  | (315.0 | ) |  |  | (3,634.2 | )
The reconciliation from the weighted nominal to the effective tax rate is summarized as follows:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Income before tax |  |  | 12,929.8 |  |  |  | 13,398.4 |  |  |  | 16,513.4 |
Adjustment on taxable basis |  |  |  |  |  |  |  |  |  |  |  |
Non-taxable income |  |  | (310.9 | ) |  |  | (392.0 | ) |  |  | (999.9 | )
Government grants related to sales taxes |  |  | (1,889.1 | ) |  |  | (1,528.6 | ) |  |  | (1,360.7 | )
Share of results of joint ventures |  |  | 3.1 |  |  |  | 5.0 |  |  |  | (3.1 | )
Non-deductible expenses |  |  | 91.1 |  |  |  | 539.3 |  |  |  | 415.9 |
Complement of income tax of foreign subsidiaries due in Brazil |  |  | 560.4 |  |  |  | 148.0 |  |  |  | 1,965.2 |
Results of intercompany transactions non-taxable/not deductible in Brazil |  |  | (547.5 | ) |  |  | 640.7 |  |  |  | (1,313.2 | )
|  |  | 10,836.9 |  |  |  | 12,810.8 |  |  |  | 15,217.6 |
Aggregated weighted nominal tax rate |  |  | 29.22 | % |  |  | 30.16 | % |  |  | 31.59 | %
Taxes payable – nominal rate |  |  | (3,166.6 | ) |  |  | (3,864.0 | ) |  |  | (4,806.9 | )
Adjustment on tax expense |  |  |  |  |  |  |  |  |  |  |  |
Regional incentives - income taxes |  |  | 304.6 |  |  |  | 264.5 |  |  |  | 257.8 |
Deductible interest on shareholders' equity |  |  | 1,649.0 |  |  |  | 1,867.7 |  |  |  | 1,646.1 |
Tax savings from goodwill amortization on tax books |  |  | 175.2 |  |  |  | 142.0 |  |  |  | 142.4 |
Withholding tax over undistributed profits |  |  | (356.9 | ) |  |  | 153.1 |  |  |  | (672.4 | )
Recognition / write-off of deferred charges on tax losses |  |  | (178.9 | ) |  |  | 796.7 |  |  |  | 138.1 |
PERT 2017 |  |  | (2,784.7 | ) |  |  | - |  |  |  | - |
Others with reduced taxation |  |  | (721.0 | ) |  |  | 325.0 |  |  |  | (339.3 | )
Income tax and social contribution expense |  |  | (5,079.3 | ) |  |  | (315.0 | ) |  |  | (3,634.2 | )
Effective tax rate |  |  | 39.28 | % |  |  | 2.35 | % |  |  | 22.01 | %
The main events that impacted the effective tax rate in the period were: § Government subsidy on sales taxes: The reduction of tax expense reflects the deductibility of investment subsidies arising from deferred and presumed ICMS credits. § Deductible Interest on net equity: Under Brazilian law, companies have the option to distribute interest on equity (“JCP”), calculated based on the long-term interest rate (“TJLP”), Which are deductible for income tax purposes under the applicable legislation, which amount to be distributed until now is R$4,869.8, of which R$4,850.1 are deductible and the tax impact is R$1,649.0. § Withholding tax on dividends: the variance is mainly driven by two factors (i) reversal of the provision related to withholding tax on unremitted earnings of Argentinean subsidiaries in 2016 due to a change in the local law that exempts the payment of dividends from withholding tax; and (ii) constitution of provision and exchange variation effect related to withholding tax on unremitted earnings of Canadian subsidiaries of approximately R$ 145 million, as opposed to the approximated amount of R$ 5 million in the same period of the previous year. § Amongst the contingencies covered by the Federal Tax Amnesty Program (“PERT 2017” ), there is a litigation whose purpose was to discuss the Presumed Profit method used by CRBS ( one of Ambev’s subsidiaries in Brazil) to calculate its Corporate Income Taxes (namely, “IRPJ” and “CSLL”). The total amount booked as an expense, after the conversion of the Provisional Measure 783/2017 into Law, was R$ 2,926 million (principal, fine and interests), being R$ 2,785 million booked as non-recurring expenses under Corporate Income Tax and R$ 141 million under Financial Results.

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