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Taxes
 12 Months Ended
Dec. 31, 2023
Notes and other explanatory information [abstract]  
Taxes

 

12.Taxes

 

12.1 Deferred income tax and social contribution

 

                   
Consolidated       Recognized         Recognized   
  Balance as of Recognized Other comprehensive Balance as of Recognized Other Reclassi- comprehensive Balance as of 
  January 1, 2022 in income (a) income December 31, 2022 in income (a) fication (b) income December 31, 2023
Noncurrent assets                    
Provision for allocation of PIS and Cofins credits   -  629,427   -   -   629,427  19,985 -   - -   649,412
Provisions for legal claims   502,873  132,175   -   -   635,048   (41,717)  4,643   (5,496) -   592,478
Post-employment benefits 429,121 22,724   - (88,548)   363,297  14,774 -   (2,466) 129,007   504,612
Fair value in the purchase and sale of power 185,460 65,700   -   -   251,160 5,060 -   - -   256,220
Impairment of assets 313,275  (17,486)   -   -   295,789   (73,376) -   (9,126) -   213,287
Voluntary retirement program   23,030  (22,551)   -   - 479   207,330 -   - -   207,809
Expected credit losses 151,149  (11,412)   -   -   139,737 1,852 -   (633) -   140,956
Tax losses and negative tax basis 121,802 73,260   -   -   195,062   (55,382)   (124) (36,271) -   103,285
Taxes with suspended liability   74,665   7,516   -   -  82,181 7,672 -   - -  89,853
Lease liability   55,659 19,124   -   -  74,783  (121) -   - -  74,662
Research and development and energy efficiency programs 138,849  (11,766)   -   -   127,083   (59,818) -   - -  67,265
Amortization - concession   52,429   5,220   -   -  57,649 5,220 -   - -  62,869
Provisions for performance and  profit sharing 115,871   (100,957)   -   -  14,914  35,889 -   - -  50,803
Concession contracts   19,769 (1,067)   -   -  18,702  (1,069) -   - -  17,633
Others 101,047 22,814   -   -   123,861 5,011 -   - -   128,872
  2,284,999  812,721   - (88,548)   3,009,172  71,310  4,519 (53,992) 129,007   3,160,016
(-) Noncurrent liabilities                    
Concession contracts 1,788,474 51,919 8,155   -   1,848,548 6,891 209,086 (38,064) -   2,026,461
Deemed cost of property, plant and equipment 326,497  (18,810)   -   -   307,687   (16,769) -   - -   290,918
Accelerated depreciation 102,324 25,832   -   -   128,156  18,382 -   - -   146,538
Fair value in the purchase and sale of power 290,964 76,834   -   -   367,798 6,775 -   - -   374,573
Escrow deposits monetary variation   65,119   7,708   -   -  72,827  12,063 -   - -  84,890
Right-of-use asset   54,980 16,897   -   -  71,877  (1,552) -   - -  70,325
Transaction cost on loans and financing and debentures   28,036   2,280   -   -  30,316  11,348 -   - -  41,664
Others   30,174 21,672   - 3,500  55,346  17,125 - (16,552) (2,167)  53,752
  2,686,568  184,332 8,155 3,500   2,882,555  54,263 209,086 (54,616) (2,167)   3,089,121
Net  (401,569)  628,389  (8,155) (92,048)   126,617  17,047  (204,567) 624 131,174  70,895
Assets presented in the Statement of Financial Position 963,259         1,644,299           1,757,688
Liabilities presented in the Statement of Financial Position  (1,364,828)       (1,517,682)         (1,686,793)
(a) Effects mainly of business combinations occurring in 2023 (Note 1.2) and 2022.
(b) Reclassification to Assets classified as held for sale (Note 39).

 

12.1.1Projection for realization of deferred income tax and social contribution:

 

The projection of deferred tax credits realization recorded in noncurrent assets and liabilities is based on the realization period of each item of deferred assets and liabilities and tax losses, according to future results projections. These projections were evaluated by the Supervisory Board and approved by the Board of Directors on February 29, 2024.

 

The criteria used for the realization of each item are related to the predictability of realization of the main value that gave rise to the temporary difference. When the expectation of realization of the item is difficult to predict, mainly because it is not under the control of the Company, such as provisions for legal claims, the Company adopts history of realization to project its future realization.

 

Following are the items that were the basis for the setup of the main credits of the company, as well as their form of realization:

 

- Provision for allocation of PIS and Cofins credits: will be carried out as the amounts are passed on in the tariff review and readjustment processes approved by the regulatory body, if any, or by the reversal of the respective provision;

- Provisions for post-employment benefits: realized as the payments are made to the Copel Foundation or reversed according to new actuarial estimates;

-  Provisions for legal claims: realized according to court decisions or by the reversal when the possible risk of

 

the shares is reviewed;

 

-  Impairment of assets: realized through the amortization and/or depreciation of the impaired asset;

 

-  Deemed cost: realized through the amortization and/or depreciation of the valued asset;

 

-  Amounts related to the concession agreement: realized over the term of the agreement;

 

-   Amounts related to tax losses and negative tax basis: recovered by offsetting against future taxable income, considering the limit established in the legislation;

 

-   Other amounts: realized when they meet the deductibility criteria provided for in tax legislation, or upon reversal of the recorded amounts.

 

The projected realization of the deferred taxes is shown below:

 

   
  Assets  Liabilities 
2024            1,011,652             (349,672)
2025               712,514             (326,304)
2026               200,526             (275,776)
2027               101,950             (231,884)
2028                 63,152             (198,029)
2029 to 2031               150,686             (489,463)
after 2031               919,536          (1,217,993)
             3,160,016          (3,089,121)

 

12.1.2Unrecognized tax credits

 

In addition to the deferred income tax and social contribution credits recorded in assets, on December 31, 2023, the Company did not recognize income tax and social contribution credits on income tax and social contribution tax losses in the amount of R$87,410 (R$197,540, as of December 31, 2022) for not having reasonable assurance of generation of future taxable profits sufficient to allow the utilization of these tax credits, mainly at Cutia Empreendimentos Eólicos S.A. (subsidiary of Copel GeT). As a result of the divestment process, the value of unrecognized credits of UEGA as of December 31, 2023, is presented in Note 39.

 

12.2 Other taxes recoverable and other tax obligations

   
  12.31.2023 12.31.2022
Current assets    
Recoverable ICMS (VAT)           158,010           128,288
Recoverable PIS/Pasep and Cofins taxes (a)           784,593        1,110,659
Other recoverable taxes                  740                  747
            943,343        1,239,694
Noncurrent assets    
Recoverable ICMS (VAT)           190,229           171,374
Recoverable PIS/Pasep and Cofins taxes (a)        1,982,826        2,421,176
Other recoverable taxes             83,101             34,743
         2,256,156        2,627,293
Current liabilities    
ICMS (VAT) payable  (Note 12.2.2)           194,734           149,506
ICMS installment payment (Note 12.2.3)             11,365             10,437
PIS/Pasep and Cofins payable             34,616             70,423
IRRF on interest on capital             31,200             11,372
Special Tax Regularization Program - Pert             62,420             57,046
Other taxes                 11,748               4,822
            346,083           303,606
Noncurrent liabilities    
Social security contributions - injunction on judicial deposit           264,868           242,248
ICMS installment payment (Note 12.2.3)             29,921             37,883
Special Tax Regularization Program - Pert           317,304           347,029
Other taxes                          -               6,331
            612,093           633,491
* Balances of assets and liabilities presented on a net basis, considering the Company's right and intention to realize the assets and liabilities on a net basis.
(a) The balance contains amounts referring Pis and Cofins credit on ICMS (Note 12.2.1)

 

12.2.1Pis and Cofins credit on ICMS - Copel Distribuição

 

On August 12, 2009, Copel DIS filed for a writ of mandamus No. 5032406-35.2013.404.7000 with the 3rd Federal Court of Curitiba applying for the granting of an order to stop including ICMS in the PIS and Cofins tax base on June 16, 2020, a final unappealable ruling was handed down by the 2nd Panel of the Federal Regional Court of the 4th Region recognizing the right of Copel DIS to exclude from the PIS and Cofins tax base the full amount of ICMS included in the energy supply and distribution invoices. The ruling also recognized that the limitation period, in this case, is of five years and that, therefore, Copel has the right to recover the amounts that have been paid during the five years preceding the filing of the writ of mandamus until the date of the final unappealable decision.

Based on this favorable decision, Copel DIS recognized the updated tax credit in assets which, after the credits were enabled by the Brazilian Federal Revenue Service, has been recovered through compensation with taxes payable since June 2021, for the Cofins credit and since January 2024 for PIS credit.

 

On May 13, 2021, the Federal Supreme Court concluded the judgment of the motions for clarification filed by the Federal Government in Extraordinary Appeal 574.706/PR, partially granting the following terms: (i) relating to ICMS excluded from the PIS and Cofins calculation basis, the understanding that it is the highlighted ICMS prevailed; and (ii) modulate the effects of the judgment whose production will take place after March 15, 2017, except for the judicial and administrative actions filed up to the date of the session in which the judgment was delivered. Therefore, the final decision on this matter did not impact the final and unappealable decision in favor of Copel DIS, maintaining the treatment and amounts recorded.

 

The following table shows the movement of the asset:

 

   
Balance as of January 1, 2022              4,355,265
Monetary variation                  294,952
Offsetting with taxes payable            (1,165,601)
Balance as of December 31, 2022              3,484,616
Monetary variation                  256,492
Offsetting with taxes payable            (1,075,244)
Balance as of December 31, 2023              2,665,864
  Current               777,481
  Noncurrent            1,888,383

 

 

The asset will continue to be offset against future federal tax debts, respecting the deadlines and limits established by current tax legislation.

 

a)  Liabilities to be refunded to consumers

 

The Company recorded a liability to be refunded to consumers related to the recovery of tax credits for the last 10 years, counting from the date of the final and unappealable decision, considering the current legislation, the statute of limitations period defined in the civil code and the jurisprudence of the courts.

 

On February 09, 2021, Aneel opened Public Consultation No. 05/2021 aimed at discussing how to return tax credits to consumers, proposing that the amounts to be returned for each tariff cycle (credits with the Brazilian Federal Revenue Office, added to any judicial deposits already received by the concessionaire/permissionaire) are deducted from the electricity bill, through apportionment by the set of consumers.

 

Additionally, Aneel Order No. 361/2021 established that in exceptional situations, in which there is a possibility of a significant tariff increase, part of the PIS and Cofins credits may be used in advance of the conclusion of the public consultation, limited to 20% of the total involved in lawsuits filed by distributors.

 

The following table shows the movement of liabilities:

   
Balance as of January 1, 2022              3,326,795
Monetary variation                  261,463
(-) Transfer to sectorial financial liabilities (Note 8)            (1,593,100)
Balance as of December 31, 2022              1,995,158
Monetary variation                  199,241
(-) Transfer to sectorial financial liabilities (Note 8)            (1,462,673)
Balance as of December 31, 2023                 731,726
  Current               558,591
  Noncurrent               173,135

  

 

The balance of the liability will be refunded to the consumer as the tax credits in the asset are offset.

 

b)  Provision for allocation of PIS and Cofins credits

 

On June 27, 2022, Federal Law No. 14,385 was enacted, regulating the allocation of tax amounts overcharged by public electricity distribution service providers, due to the collection of PIS and Cofins on ICMS, recognized by the judiciary as undue.

 

As detailed earlier in this note, Copel DIS has recognized the right to exclude the full amount of ICMS from the PIS and Cofins calculation basis and has already transferred part of these amounts to consumers, through reductions in the tariff adjustments approved by Aneel.

 

In this context, despite the lack of regulation of this Law, based on the review of the risk assessment carried out by Management, Copel DIS decided to recognize an additional provision, with no immediate cash effect, referring to the period between the 11th and the 16th year from the date of the final and unappealable decision of the lawsuit. Therefore, on June 30, 2022, R$810,563 of provision for allocation of PIS and Cofins credits and R$1,011,370 of monetary restatement were recorded, totaling R$1,821,933.

 

The Management of Copel DIS understands that the refund to consumers is limited to the tax credit amounts of the last 10 years from the date of the final and unappealable decision and, therefore, is evaluating the appropriate measures to be taken, including legal measures, considering the shelter given to unappealable decisions and applicable limitation periods.

 

On December 12, 2022, the Brazilian Association of Electric Energy Distributors - Abradee filed a Direct Action of Unconstitutionality - ADI with the Federal Supreme Court - STF, questioning Law No. 14,385/2022. The judgement was included in the virtual sessions from November 10, 2023, to November 20, 2023, and, after the vote of the reporting minister, who dismissed the request made in the direct action, the case was highlighted for judgment in a physical plenary session, which has not yet been carried out. The Company awaits the unfolding of the ADI.

 

The table below shows the changes in the provision:

   
Balance as of January 1, 2022                            -
Provision for allocation of PIS and Cofins credits                 810,563
Monetary variation               1,011,370
Balance as of June 30, 2022              1,821,933
Monetary variation                    29,324
Balance as of December 31, 2022              1,851,257
Monetary variation                    58,518
Balance as of December 31, 2023              1,909,775

 

Any allocation of this provision will occur only after the asset's tax credits are offset.

 

12.2.2ICMS on electricity operations

 

Supplementary Law No. 194/2022 was published on June 23, 2022, prohibiting that ICMS rates be set on electricity transactions at a level higher than on general transactions, considering the essentiality of related goods and services. Furthermore, it set forth that ICMS is not levied on transmission and distribution services and sector charges related to electric energy transactions. In compliance with the law, and after issue of state tax authorities’ opinions, the Company implemented the necessary changes in September 2022 to comply with the legislation. However, on February 9, 2023, the Brazilian Supreme Court - STF granted States, in a preliminary decision, in the records of Direct Action of Unconstitutionality - ADI 7195, suspension of the article that excluded such items from the taxed portion of the electricity bill. Considering this decision, the Company resumed ICMS taxation on said services and sector charges. On March 3, 2023, the preliminary injunction was approved by the Plenary of the STF. The merits of this ADI are pending judgment.

 

12.2.3Incentive installment payment program for ICMS tax credits in the State of Paraná

 

On September 27, 2022, the Company adhered to the installment payment program for previously recognized ICMS, established by the State of Paraná through State Law No. 20946/2021, regulated by State Decree No. 10766/2022, wherein R$92,249 debts were entered in its report of tax position, updated until September 2022 with fine, interest and monetary restatement. By adhering to said program, the Company reduced R$41,696 in charges, with a consolidated balance of R$50,553 at the adhesion date, to be paid in 60 monthly installments until September 2027, according to the mentioned program regulation. The Company has been paying the monthly installments on a regular basis, restated by the Selic rate.

12.3Reconciliation of provision for income tax (IRPJ) and social contribution (CSLL)

 

     
    Restated Restated
  12.31.2023 12.31.2022 12.31.2021
Income before IRPJ and CSLL      2,489,724          942,888            4,580,425
(-) Equity in income       (307,808)        (478,577)              (366,315)
Income after IRPJ and CSLL      2,181,916          464,311            4,214,110
IRPJ and CSLL (34%)       (741,851)        (157,866)           (1,432,797)
Tax effects on:      
Interest on equity (JSCP)         325,720          329,800               223,380
Dividends                453                 250                      437
Non deductible expenses         (22,701)          (25,172)                (24,679)
Tax incentives             9,905            11,492                 40,011
Unrecognized tax loss and negative basis of CSLL         (24,345)          (29,870)                (29,002)
Difference between tax bases of deemed profit and taxable profit           18,844            35,677                 49,638
Effect of non taxable monetary variation (Selic) on undue tax payments           87,207          100,282 -
Others           (7,289)            16,506                  (5,512)
Current IRPJ and CSLL       (371,104)        (368,035)              (372,180)
Deferred IRPJ and CSLL            17,047          649,134              (806,344)
Effective rate - % 16.2% -60.5% 28.0%

 

 

12.4Consumption tax reform

 

On December 20, 2023, the Constitutional Amendment – EC 132 approved the consumption tax reform, which replaces five taxes (PIS, Cofins, IPI, ICMS and ISS) with a Dual Value Added Tax (IVA) of international standard, formed by the Contribution on Goods and Services - CBS, federal, and by the Tax on Goods and Services - IBS, from states and municipalities. The reform also creates the Selective Tax, of a regulatory nature, with the aim of discouraging the consumption of goods and services that are harmful to health and the environment.

 

According to the EC, the new taxes will come into force in 2026 (year of “calibration”), with complete implementation starting in 2033, ending the validity of the current taxes by 2032. The application of the new taxes will rely on general rules of full non-cumulative nature (broad crediting), equivalent rules for IBS and CBS, equalized rates (except for specific reduction benefits), broad tax base, taxation at destination and outside calculation. As foreseen in the text of the EC, there will still be a need for regulations through complementary laws that should occur during the year 2024.

 

Considering the general rules established at the level of this EC, it is still not possible to accurately determine the final impacts of the referred reform for the Company. However, considering that Copel operates in regulated businesses, with prices and tariffs subject to contractual economic-financial rebalancing clauses, the Company expects that the implementation of the new taxes will not generate a relevant impact on its future results. For business segments with the application of free negotiation prices, the current contracts also have economic-financial rebalancing clauses or, alternatively, they may be subject to the application of article 21 of this EC, so that there is also no expectation of relevant impacts on the Company's future results.