10. INCOME AND SOCIAL CONTRIBUTION TAXES

a) Income and Social Contribution taxes recoverable

The balances of income tax and Social Contribution tax refer to tax credits in the corporate income tax returns of previous years and to advance payments which will be offset against federal taxes eventually payable.


	2018		2017
Income tax		253		231
Social contribution tax		140		130
		393		361

Current		387		340

Non-current		6		21

b) Income and Social Contribution taxes

The balances of income tax and Social Contribution tax recorded in current liabilities refer mainly to the taxes owed by the subsidiaries which report by the Real Profit method and have opted to make monthly payments based on estimated revenue, and also by the subsidiaries that have opted for the Presumed Profit method, in which payments are made quarterly.


	2018		2017
Current
Income tax		83		88
Social contribution tax		29		27

		112		115

c) Deferred income and social contribution taxes

The Company has deferred taxed assets from unused tax loss carryforwards, negative base for the Social Contribution tax, and deductible temporary differences, at the statutory rates applicable to each legal entity in Brazil of 25% (for Income tax) and 9% (for the Social Contribution tax), as follows:


	2018			2017
Deferred tax assets
Tax loss carryforwards		373			524
Provisions for contingencies		218			218
Provisions for losses on investments		609			335
Operating provisions		455			539
Provisions for profit sharing		25			1
Post-employment obligations		1,477			1,179
Estimated provision for doubtful receivables		279			207
Taxes with suspended liability		—			14
Onerous concession		8			8
Adjustment to fair value: Swap/Loss		—			13
Others		27			14

Total		3,471			3,052

Deferred tax liabilities
Funding cost		(25	)		(31	)
Deemed cost		(239	)		(276	)
Acquisition costs of equity interests		(501	)		(464	)
Borrowing costs capitalized		(168	)		(166	)
Taxes on revenues not redeemed – Presumed Profit accounting method		(5	)		(1	)
Adjustment to expectation of cash flow – Concession assets		(804	)		(937	)
Adjustment to fair value: Swap/Gains		(277	)		(1	)
Others		(33	)		(40	)

Total		(2,052	)		(1,916	)

Total, net		1,419			1,136

Total assets		2,147			1,871
Total liabilities		(728	)		(735	)

The changes in deferred income and social contribution taxes were as follows:


	Consolidated
Balance at December 31, 2015		809
Effects allocated to Statement of income		141
Effects allocated to Statement of comprehensive income		265
Balance at Dec. 31, 2016		1,215
Effects allocated to Statement of income		(198	)
Effect allocated to Statement of comprehensive income Net loss (gain) on actuarial restatement		133
Variations in deferred tax assets and liabilities		(14	)

Balance at Dec. 31, 2017		1,136

Effects allocated to Statement of income – continuing operations		(16	)
Effect allocated to Statement of comprehensive income
Re-measurement of defined-benefit plan obligations		239
Effects allocated to Equity
First-time adoption of IFRS 9 – effects allocated to equity (Note 2.5)		51
Reversal of deemed cost		18
Transfer to assets held for sale		(3	)
Variations in deferred tax assets and liabilities		(3	)
Deferred taxes arising from business combination		(3	)

Balance at December 31, 2018		1,419

On March 28, 2019, the Board of Directors meeting approved the Company’s estimated future taxable profits forecast. This forecast was also submitted for examination by the Fiscal Council on March 28, 2019.

The Company estimated that the balance of deferred tax asset as of December 31, 2018 will be realized, as follows:


2019			567
2020			566
2021			542
2022			547
2023			492
2024 to 2026			458
2027 to 2028			299

			3,471

d) Reconciliation of income tax and Social Contribution tax effective rate

This table reconciles the statutory income tax (rate 25%) and social contribution tax (rate 9%) with the current income tax expense in the Statement of income:


	2018			2017			2016
Profit before income and Social Contribution taxes		1,978			1,646			367
Income tax and Social Contribution tax – nominal expense (34%)		(672	)		(560	)		(125	)
Tax effects applicable to:
Gain (loss) in subsidiaries by equity method (net of effects of Interest on Equity)		(61	)		(129	)		(132	)
Interest on Equity		71			—			129
Gain on dilution of an equity interest		—			8
Deduction – Intangible assets of concession amortized – capital gain –Taesa		—			—			20
Non-deductible contributions and donations		(6	)		(6	)		(4	)
Tax incentives		29			11			3
Tax credits not recognized		(1	)		—			5
Difference between Presumed Profit and Real Profit		89			81			126
Non-deductible penalties		(12	)		(14	)		(16	)
Excess reactive power and demand		—			(2	)		(12	)
Others		(36	)		(33	)		(27	)

Income tax and Social Contribution – effective gain (expense)		(599	)		(644	)		(33	)

Current tax		(583	)		(446	)		(174	)
Deferred tax		(16	)		(198	)		141

		(599	)		(644	)		(33	)

Effective rate		30.30	%		39.13	%		8.99	%