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Note 17 - Deferred Income Tax and Social Contribution | 12 Months Ended
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Dec. 31, 2017
Statement Line Items [Line Items] |
Disclosure of deferred income tax and social contribution [text block] |
17. | DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
Deferred taxes for income tax and social contribution taxes are calculated on tax losses, the negative tax basis of social contributions and the temporary differences between the tax bases and the carrying amount in the financial statement of assets and liabilities. The rates of these taxes in Brazil, which are expected at the realization of deferred taxes, are 25% for income tax and 9% for social contribution. For the other regions, with operational activity, expected rates, are as follow:
Central America and the Caribbean | from 23% | to | 31%
Latin America (i) | from 14% | to | 35%
Canada |  | 26% |
(i) Amendments to Argentine tax legislation approved on December 29, 2017 affect tax periods beginning in October 2018 and reduce the income tax rate in the first two years from 35% to 30% and, as a after, to 25%. For fiscal year 2017, however, there is an impact of R $ 33.0 million in deferred income tax. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available to be used to offset temporary differences / loss carry forwards based on projections of future results prepared and based on internal assumptions and future economic scenarios which may therefore change. The amount of deferred income tax and social contribution by type of temporary difference is detailed as follows:
|  | 2017 |  |  | 2016 |
|  | Assets |  |  | Liabilities |  |  | Net |  |  | Assets |  |  | Liabilities |  |  | Net |
Investment securities |  |  | 39.0 |  |  |  | - |  |  |  | 39.0 |  |  |  | 9.0 |  |  |  | - |  |  |  | 9.0 |
Intangible |  |  | - |  |  |  | (719.5 | ) |  |  | (719.5 | ) |  |  | 0.7 |  |  |  | (733.9 | ) |  |  | (733.2 | )
Employee benefits |  |  | 631.1 |  |  |  | - |  |  |  | 631.1 |  |  |  | 467.6 |  |  |  | - |  |  |  | 467.6 |
Trade payables |  |  | 1,382.4 |  |  |  | (314.2 | ) |  |  | 1,068.2 |  |  |  | 977.4 |  |  |  | (531.3 | ) |  |  | 446.1 |
Trade receivable |  |  | 52.3 |  |  |  | - |  |  |  | 52.3 |  |  |  | 42.7 |  |  |  | - |  |  |  | 42.7 |
Derivatives |  |  | 6.8 |  |  |  | (5.8 | ) |  |  | 1.0 |  |  |  | 71.1 |  |  |  | (110.7 | ) |  |  | (39.6 | )
Inventories |  |  | 248.7 |  |  |  | (18.1 | ) |  |  | 230.6 |  |  |  | 267.4 |  |  |  | (13.8 | ) |  |  | 253.6 |
Property, plant and equipment |  |  | - |  |  |  | (920.5 | ) |  |  | (920.5 | ) |  |  | - |  |  |  | (905.7 | ) |  |  | (905.7 | )
Withholding tax over undistributed profits and royalties |  |  | - |  |  |  | (788.6 | ) |  |  | (788.6 | ) |  |  | - |  |  |  | (684.8 | ) |  |  | (684.8 | )
Investments in associates |  |  | - |  |  |  | (421.6 | ) |  |  | (421.6 | ) |  |  | - |  |  |  | (421.6 | ) |  |  | (421.6 | )
Loss carryforwards |  |  | 501.0 |  |  |  | - |  |  |  | 501.0 |  |  |  | 1,139.9 |  |  |  | - |  |  |  | 1,139.9 |
Provisions |  |  | 347.3 |  |  |  | (39.7 | ) |  |  | 307.6 |  |  |  | 448.9 |  |  |  | (44.6 | ) |  |  | 404.3 |
Other items |  |  | - |  |  |  | (30.5 | ) |  |  | (30.5 | ) |  |  | (15.1 | ) |  |  | (24.7 | ) |  |  | (39.8 | )
Gross deferred tax assets / (liabilities) |  |  | 3,208.6 |  |  |  | (3,258.5 | ) |  |  | (49.9 | ) |  |  | 3,409.6 |  |  |  | (3,471.1 | ) |  |  | (61.5 | )
Netting by taxable entity |  |  | (929.3 | ) |  |  | 929.3 |  |  |  | - |  |  |  | (1,141.4 | ) |  |  | 1,141.4 |  |  |  | - |
Net deferred tax assets / (liabilities) |  |  | 2,279.3 |  |  |  | (2,329.2 | ) |  |  | (49.9 | ) |  |  | 2,268.2 |  |  |  | (2,329.7 | ) |  |  | (61.5 | )
The Company only offsets the balances of deferred income tax and social contribution assets against liabilities when they are within the same entity and are expected to be realized in the same period. Tax losses and negative bases of social contribution and temporary deductible differences in Brazil, on which the deferred income tax and social contribution were calculated, have no expiry date. At December 31, 2017 the assets and liabilities deferred taxes related to combined tax losses has an expected utilization/settlement by temporary differences as follows:
|  | 2017 |
Deferred taxes not related to tax losses |  | to be realized until 12 months |  |  | to be realized after 12 months |  |  | Total |
Investment securities |  |  | - |  |  |  | 39.0 |  |  |  | 39.0 |
Intangible assets |  |  | - |  |  |  | (719.5 | ) |  |  | (719.5 | )
Employee benefits |  |  | 112.8 |  |  |  | 518.3 |  |  |  | 631.1 |
Trade payables |  |  | 1,382.4 |  |  |  | (314.2 | ) |  |  | 1,068.2 |
Trade receivable |  |  | 47.3 |  |  |  | 5.0 |  |  |  | 52.3 |
Derivatives |  |  | 1.0 |  |  |  | - |  |  |  | 1.0 |
Inventories |  |  | 230.6 |  |  |  | - |  |  |  | 230.6 |
Property, plant and equipment |  |  | (58.1 | ) |  |  | (862.4 | ) |  |  | (920.5 | )
Withholding tax over undistributed profits and royalties |  |  | - |  |  |  | (788.6 | ) |  |  | (788.6 | )
Investments in associates |  |  | - |  |  |  | (421.6 | ) |  |  | (421.6 | )
Provisions |  |  | 91.7 |  |  |  | 215.9 |  |  |  | 307.6 |
Other items |  |  | - |  |  |  | (30.5 | ) |  |  | (30.5 | )
Total |  |  | 1,807.7 |  |  |  | (2,358.6 | ) |  |  | (550.9 | )
Deferred tax related to tax losses |  | 2017 |
2018 |  |  | 209.0 |
2019 |  |  | 98.3 |
2020 |  |  | 16.1 |
2021 |  |  | 10.6 |
A partir de 2022 (i) |  |  | 167.0 |
Total |  |  | 501.0 |
(i) There is no expectation of realization that exceeds the term of 10 years. As at December 31, 2017, deferred tax assets in the amount of R$427.4 ( R$455.6 as at December 31, 2016) related to tax losses and temporary differences of subsidiaries abroad were not recorded as the realization is not probable. Major part of the fiscal losses amount do not have a carryforward limit for utilization and the tax losses carried forward in relation to them are equivalent to R$1,709.5 in December 31, 2017 ( R$2,285.2 in December 31, 2016). The net change in deferred income tax and social contribution is detailed as follows:
At December 31, 2015 |  |  | 276.3 |
Full recognition of actuarial gains/(losses) |  |  | 57.7 |
Investment hedge |  |  | (12.0 | )
Investment hedge - put option of a subsidiary interest |  |  | (364.6 | )
Cash flow hedge - gains/(losses) |  |  | 536.2 |
Gains/losses on translation of other foreign operations |  |  | (578.2 | )
Recognized in other comprehensive income |  |  | (360.9 | )
Recognized in income statement |  |  | 98.9 |
Changes directly in balance sheet |  |  | (75.8 | )
Recognized in deferred tax |  |  | (21.6 | )
Anticipation federal amnesty |  |  | (54.2 | )
At December 31, 2016 |  |  | (61.5 | )
Full recognition of actuarial gains/(losses) |  |  | 40.2 |
Investment hedge |  |  | (262.7 | )
Investment hedge - put option of a subsidiary interest |  |  | (31.8 | )
Cash flow hedge - gains/(losses) |  |  | (269.2 | )
Gains/(losses) on translation of other foreign operations |  |  | 136.1 |
Recognized in other comprehensive income |  |  | (387.4 | )
Recognized in income statement |  |  | 253.0 |
Changes directly in balance sheet |  |  | 146.0 |
Recognized in deferred tax |  |  | 35.4 |
Recognized in other group of balance sheet |  |  | 110.6 |
At December 31, 2017 |  |  | (49.9 | )

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