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INCOME AND SOCIAL CONTRIBUTION TAXES (Tables) | 12 Months Ended
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Dec. 31, 2020
INCOME AND SOCIAL CONTRIBUTION TAXES |
Schedule of deferred income and social contribution taxes |
|  | December 31, |  | December 31,
|  | 2020 |  | 2019
Tax loss carryforwards |  | 1,013,008 |  | 600,249
Negative tax base |  | 329,412 |  | 146,346
Assets temporary differences |  |  |  |
Provision for judicial liabilities |  | 233,100 |  | 265,571
Operating provisions and other losses |  | 1,051,096 |  | 914,696
Exchange rate variation (1) |  | 6,112,906 |  | 2,001,942
Losses on derivatives (“MtM”) (1) |  | 2,303,833 |  | 618,427
Fair value adjustment on business combination – Amortization |  | 718,645 |  | 713,656
Unrealized profit on inventories |  | 176,847 |  | 293,322
Lease |  | 287,066 |  | 22,044
Provision of deferred taxes on results of subsidiaries abroad |  | 33,893 |  |
Other temporary differences (3) |  | 158,172 |  | —
|  | 12,417,978 |  | 5,576,253
Liabilities temporary differences |  |  |  |
Goodwill - Tax benefit on unamortized goodwill |  | 469,875 |  | 216,857
Property, plant and equipment - deemed cost adjustment |  | 1,385,642 |  | 1,506,220
Accelerated tax depreciation |  | 1,025,136 |  | 1,113,200
Borrowing cost |  | 110,036 |  | 104,549
Fair value of biological assets |  | 237,879 |  | 53,502
Tax provision on results of subsidiaries abroad (2) |  |  |  | 463,850
Fair value adjustment on business combination – Deferred taxes, net |  | 469,419 |  | 502,347
Tax credits - gains in tax lawsuit (ICMS from the PIS/COFINS calculation basis) |  | 43,559 |  | 43,559
Other temporary differences |  |  |  | 17,004
|  | 3,741,546 |  | 4,021,088
Non-current assets |  | 8,677,002 |  | 2,134,040
Non-current liabilities |  | 570 |  | 578,875
1)The variation is due to the increase in the exchange rate in the year ended December 31, 2020. 2)Amount reversed as a result of a favorable judgement entered for Company, which ensured Company's right to calculate and pay the Corporate Income Tax and Social Contribution on Net Income due in Brazil, without adding to its taxable base the profit earned as of January 2019 by its wholly-owned subsidiary Suzano International Trade GmbH (former Fibria International Trade GmbH), in accordance with the terms of the Brazil-Austria Double Taxation Treaty, either with regard to the merged company Fibria Celulose SA (wholly-owned subsidiary merged on April 1, 2019) in relation to the 1st quarter 2019 base period early terminated due to the merger, either with respect to the subsequent calculation base periods when Suzano International Trade GmbH was already a subsidiary of the Company. 3)On December 29, 2020, with the final decision of CADE's approval related to the purchase and sale agreement of rural property (note 1.2.2), Management and legal advisors understand that all conditions suspensive were implemented, with the tax recognition of capital gain being required, pursuant to art. 117 of the National Taxation Code. As the accounting recognition will only occur at the Closing of the Transaction, on January 5, 2021 (note 32.1) with the fulfillment of the performance obligation and delivery of the ownership of the properties to the client, there was a need to establish the deferred tax asset on this difference temporary, in the amount of R$175,202.
Schedule of accumulated tax losses and social contribution tax loss carryforwards |
|  | December 31, |  | December 31,
|  | 2020 |  | 2019
Tax loss carry forward |  | 4,052,013 |  | 2,400,998
Social contribution tax loss carryforward |  | 3,660,133 |  | 1,626,064
Schedule of rollforward of net balance of deferred income tax |
|  | December 31, |  | December 31,
|  | 2020 |  | 2019
Beginning balance |  | 1,555,165 |  | (1,029,135)
Tax loss |  | 412,759 |  | 270,559
Tax loss carryforwards |  | 183,066 |  | 139,719
(Reversal) provision for judicial liabilities |  | (32,471) |  | 31,262
Operating provision (reversal) and other losses |  | 136,400 |  | (21,757)
Exchange rate variation (1) |  | 4,110,964 |  | 552,421
Derivative losses (“MtM”)(1) |  | 1,685,406 |  | 319,860
Fair value adjustment on business combination – Amortization |  | 37,917 |  | 699,527
Unrealized profit on inventories |  | (116,475) |  | 65,492
Lease |  | 265,022 |  | (3,274)
Tax benefit on unamortized goodwill |  | (253,018) |  | (203,696)
Property, plant and equipment - Deemed cost |  | 120,578 |  | 46,359
Accelerated depreciation |  | 88,064 |  | 82,982
Borrowing cost |  | (5,487) |  | 44,727
Fair value of biological assets |  | (184,377) |  | (60,778)
Reversal/(provision) of deferred taxes on the result of subsidiaries abroad (2) |  | 497,743 |  | (351,485)
Business combination |  |  |  | 1,034,842
Tax credits - gains in tax lawsuit (ICMS from the PIS/COFINS calculation basis) |  |  |  | (43,559)
Other temporary differences |  | 175,176 |  | (18,901)
Ending balance |  | 8,676,432 |  | 1,555,165
| 1) |  | The variation is due to the increase in the exchange rate in the year ended December 31, 2020.
| 2) |  | On December 29, 2020, with the final decision of CADE's approval related to the purchase and sale agreement of rural property (note 1.2.2), Management and legal advisors understand that all conditions suspensive were implemented, with the tax recognition of capital gain being required, pursuant to art. 117 of the National Taxation Code. As the accounting recognition will only occur at the Closing of the Transaction, on January 5, 2021 (note 32.1) with the fulfillment of the performance obligation and delivery of the ownership of the properties to the client, there was a need to establish the deferred tax asset on this difference temporary, in the amount of R$175,202.
Schedule of reconciliation of the effects of income tax and social contribution on profit or loss |
|  | December 31, |  | December 31, |
|  | 2020 |  | 2019 |
Loss before taxes |  | (17,642,129) |  | (4,097,203) |
Income tax and social contribution benefit (expense) at statutory nominal rate of 34% |  | 5,998,324 |  | 1,393,049 |
Tax effect on permanent differences |  |  |  |  |
Taxation (difference) on profit of wholly-owned subsidiaries abroad (1) |  | 1,373,845 |  | (24,933) |
Equity method |  | 12,288 |  | 10,878 |
Thin capitalization (2) |  | (675,356) |  | (95,003) |
Credit related to Reintegra Program |  | 6,278 |  | 4,515 |
Tax incentives applicable to income tax (3) |  | 10,668 |  | 18,919 |
Director bonus |  | (7,677) |  | (43,913) |
Offset income tax abroad |  | 72,890 |  |  |
Merger of subsidiaries (4) |  | 67,311 |  |  |
Donations / Fines - Other |  | 68,623 |  | 18,949 |
|  | 6,927,194 |  | 1,282,461 |
Income tax |  |  |  |  |
Current |  | (173,322) |  | (220,311) |
Deferred |  | 5,225,655 |  | 1,093,200 |
|  | 5,052,333 |  | 872,889 |
Social Contribution |  |  |  |  |
Current |  | (8,604) |  | (25,799) |
Deferred |  | 1,883,465 |  | 435,371 |
|  | 1,874,861 |  | 409,572 |
Income and social contribution benefits (expenses) on the year |  | 6,927,194 |  | 1,282,461 |
Effective rate of income and social contribution tax expenses |  | 39.27 | % | 31.30 | %
| 1) |  | The effect of the difference in taxation of subsidiaries is substantially due to the difference between the nominal rates of Brazil and subsidiaries abroad.
| 2) |  | The Brazilian thin capitalization rules establish that interest paid or credited by a Brazilian entity to a related party abroad may only be deducted for income tax and social contribution purposes if the interest expense is viewed as necessary for the activities of the local entity and when determined limits and requirements are met. On December 31, 2020 the Company did not meet all limits and requirements, therefore a provision for tax payment was recorded.
| 3) |  | Tax incentives applicable to ICMS, which is deducted from the calculation basis of Income Tax and Social Contribution.
| 4) |  | Merger of legal entities (note 1.1).

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