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INCOME AND SOCIAL CONTRIBUTION TAXES | 6 Months Ended
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Jun. 30, 2023
INCOME AND SOCIAL CONTRIBUTION TAXES |
INCOME AND SOCIAL CONTRIBUTION TAXES | 12.INCOME AND SOCIAL CONTRIBUTION TAXES 12.1.Deferred taxes The Company calculates income tax and social contribution taxes, current and deferred, based on the following rates: (i) 15% plus an additional 10% on taxable income in excess of R$240 for IRPJ; and (ii) 9% for CSLL, on the net income. Balances are recognized in the Company’s income on an accruals basis. Subsidiaries domiciled in Brazil have their taxes calculated and provisioned in accordance with the current legislation and their specific tax regime, including, in some cases, the presumed profit method. Subsidiaries domiciled abroad are subject to taxation in their respective jurisdictions, according to local regulations. Deferred income and social contribution taxes are recognized at the net amounts in non-current assets or liabilities. In Brazil, Law nº. 12,973/14 revoked article 74 of Provisional Measure nº. 2,158/01 and determines that the parcel of the adjustment of the value of the investment in subsidiaries, direct and indirect, domiciled abroad, equivalent to the profit earned by them before income tax, except for exchange rate variation, must be added in the determination of taxable income and the social contribution calculation basis of the controlling entity domiciled in Brazil, at each year ended. The Company management believes in the validity of the provisions of international treaties entered by Brazil to avoid double taxation. In order to ensure its right to non-double taxation, the Company filed a lawsuit in April 2019, which aims to exempt the double taxation in Brazil, of profits earned by its subsidiary located in Austria, according to Law No. 12,973/14. Due to the preliminary injunction granted in favor of the Company in the aforementioned lawsuit, the Company decided not to add the profit from Suzano International Trading GmbH, located in Austria, when determining its taxable income and social contribution basis of the net profit of the Company for the six-month period ended June 30, 2023. There is no provision for tax related to the non-double taxation profits of such subsidiary in 2022. 12.1.1.Deferred income and social contribution taxes ​
​ | ​ | ​ | ​ | ​
​ | ​ | June 30, | ​ | December 31,
​ |  | 2023 |  | 2022
Tax loss | ​ | 1,203,724 | ​ | 1,207,096
Negative tax basis of social contribution | ​ | 453,538 | ​ | 445,250
​ | ​ | ​ | ​ | ​
Assets - temporary differences | ​ | ​ | ​ | ​
Provision for judicial liabilities | ​ | 292,460 | ​ | 268,596
Operating provisions and other losses | ​ | 1,030,664 | ​ | 999,028
Exchange rate variations | ​ | 2,369,677 | ​ | 4,297,503
Amortization of fair value adjustments arising from business combinations | ​ | 665,983 | ​ | 680,142
Unrealized profit on inventories | ​ | 164,996 | ​ | 363,052
Leases | ​ | 328,682 | ​ | 364,838
​ | ​ | 6,509,724 | ​ | 8,625,505
​ | ​ | ​ | ​ | ​
Liabilities - temporary differences | ​ | ​ | ​ | ​
Goodwill - tax benefit on unamortized goodwill | ​ | 1,161,410 | ​ | 1,023,103
Property, plant and equipment - deemed cost | ​ | 1,174,570 | ​ | 1,217,349
Depreciation accelerated for tax-incentive reason (1) | ​ | 834,389 | ​ | 869,997
Capitalized loan costs | ​ | 404,955 | ​ | 210,834
Fair value of biological assets | ​ | 1,027,008 | ​ | 703,274
Deferred taxes, net of fair value adjustments | ​ | 384,016 | ​ | 398,950
Tax credits - gains from tax lawsuit (exclusion of ICMS from the PIS and COFINS basis) | ​ | 155,828 | ​ | 194,121
Derivatives gains (“MtM”) | ​ | 1,108,764 | ​ | 9,164
Provision of deferred taxes on results of subsidiaries abroad | ​ | 98,984 | ​ | ​
Other temporary differences | ​ | 23,539 | ​ | 13,416
​ | ​ | 6,373,463 | ​ | 4,640,208
​ | ​ | ​ | ​ | ​
Non-current assets | ​ | 147,638 | ​ | 3,986,415
Non-current liabilities | ​ | 11,377 | ​ | 1,118
​ 1)Accelerated tax depreciation is taken as a benefit only in the income tax calculation bases. ​ ​ 12.1.2.Breakdown of accumulated tax losses and social contribution tax losses carried forward ​
​ | ​ | ​ | ​ | ​
​ | ​ | June 30, | ​ | December 31,
​ |  | 2023 |  | 2022
Tax loss carried forward | ​ | 4,814,896 | ​ | 4,828,384
Negative tax basis of social contribution carried forward | ​ | 5,039,311 | ​ | 4,947,222
​ 12.1.3.Roll-forward of deferred tax assets ​
​ | ​ | ​ | ​ | ​
​ | ​ | June 30, | ​ | December 31,
​ |  | 2023 |  | 2022
Opening balance | ​ | 3,985,297 | ​ | 8,729,929
Tax loss | ​ | (3,372) | ​ | 50,220
Negative tax basis of social contribution | ​ | 8,288 | ​ | 34,176
Provision for judicial liabilities | ​ | 23,864 | ​ | 19,251
Operating provisions and other losses | ​ | 31,636 | ​ | 33,898
Exchange rate variation | ​ | (1,927,826) | ​ | (2,257,699)
Derivative gains (“MtM”) | ​ | (1,099,600) | ​ | (2,202,857)
Amortization of fair value adjustments arising from business combinations | ​ | 775 | ​ | 8,970
Unrealized profit on inventories | ​ | (198,056) | ​ | 64,164
Leases | ​ | (36,156) | ​ | (8,534)
Goodwill - tax benefit on unamortized goodwill | ​ | (138,307) | ​ | (276,614)
Property, plant and equipment - deemed cost | ​ | 42,779 | ​ | 99,510
Depreciation accelerated for tax-incentive reason | ​ | 35,608 | ​ | 74,952
Capitalized loan costs | ​ | (194,121) | ​ | (111,435)
Fair value of biological assets | ​ | (323,734) | ​ | (272,308)
Deferred taxes on the results of subsidiaries abroad | ​ | (98,984) | ​ | ​
Credits on exclusion of ICMS from the PIS/COFINS tax base | ​ | 38,293 | ​ | 3,906
Other temporary differences | ​ | (10,123) | ​ | (4,232)
Closing balance | ​ | 136,261 | ​ | 3,985,297
​ 12.2.Reconciliation of the effects of income tax and social contribution on profit or loss ​
​ | ​ | ​ | ​ | ​
​ | ​ | June 30, | ​ | June 30,
​ |  | 2023 |  | 2022
Net income (loss) before taxes | ​ | 14,380,751 | ​ | 13,937,137
Income tax and social contribution benefit (expense) at the statutory nominal rate of 34% | ​ | (4,889,455) | ​ | (4,738,627)
​ | ​ | ​ | ​ | ​
Tax effect on permanent differences | ​ | ​ | ​ | ​
Taxation (difference) on profits of subsidiaries in Brazil and abroad (1) | ​ | 815,768 | ​ | 1,473,037
Equity method | ​ | 143 | ​ | 3,164
Thin capitalization (2) | ​ | (27,114) | ​ | (198,725)
Credit related to the Reintegra Program | ​ | 3,694 | ​ | 3,677
Director bonuses | ​ | (3,481) | ​ | (11,176)
Tax incentives | ​ | 41,769 | ​ | 22,464
Donations/Fines – Other | ​ | (1,659) | ​ | (3,052)
​ | ​ | (4,060,335) | ​ | (3,449,238)
Income tax | ​ | ​ | ​ | ​
Current | ​ | (193,265) | ​ | (116,819)
Deferred | ​ | (2,830,430) | ​ | (2,446,211)
​ | ​ | (3,023,695) | ​ | (2,563,030)
Social Contribution | ​ | ​ | ​ | ​
Current | ​ | (17,738) | ​ | (5,818)
Deferred | ​ | (1,018,902) | ​ | (880,390)
​ | ​ | (1,036,640) | ​ | (886,208)
Income and social contribution benefits (expenses) for the period | ​ | (4,060,335) | ​ | (3,449,238)
​ | ​ | ​ | ​ | ​
Effective rate of income and social contribution tax expenses | ​ | 28.23% | ​ | 24.75%
​
1) | The difference in the taxation of subsidiaries is substantially due to the differences between the nominal tax rates in Brazil and those of subsidiaries located 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 certain limits and requirements are met. On June 30, 2023 and June 30, 2022, the Company did not meet all of the limits and requirements, and therefore the expense is not deductible for the period.
12.3.Tax incentives The Company benefits from a tax incentive for partial reduction of the income tax obtained from operations carried out in areas under the jurisdiction of the Northeast Development Superintendence (“SUDENE”) and the Superintendence of Amazon Development (“SUDAM”). The IRPJ reduction incentive is calculated based on the activity profits (exploitation profits) and considers the allocation of the operating profit based on the incentive production levels for each product. ​
​ | ​ | ​ | ​ | ​
Area/Regions |  | Company |  | Maturity
Northeast Development Superintendence (“SUDENE”) | ​ | ​ | ​ | ​
Mucuri (BA) - Line 1 |  | Suzano |  | 2024
Mucuri (BA) - Line 2 |  | Suzano |  | 2027
Eunápolis (BA) |  | Veracel |  | 2025
Imperatriz (MA) |  | Suzano |  | 2024
Aracruz (ES) |  | Portocel |  | 2030
Aracruz (ES) |  | Suzano |  | 2031
​ | ​ | ​ | ​ | ​
Superintendence of Amazon Development (“SUDAM”) |  |  |  |
Belém (PA) |  | Suzano |  | 2025
​

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