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INCOME AND SOCIAL CONTRIBUTION TAXES | 12 Months Ended
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Dec. 31, 2021
INCOME AND SOCIAL CONTRIBUTION TAXES |
INCOME AND SOCIAL CONTRIBUTION TAXES | NOTE 8 — INCOME AND SOCIAL CONTRIBUTION TAXES In Brazil, income taxes include federal income tax (IRPJ) and social contribution (CSLL), which represents an additional federal income tax. The statutory rates for income tax and social contribution are 25% and 9%, respectively, and are applicable for the years ended December 31, 2021, 2020 and 2019. The foreign subsidiaries of the Company are subject to taxation at rates ranging between 23% and 35%, without considering there are subsidiaries abroad with zero tax rate, which have mainly financial activities. The differences between the Brazilian tax rates and the rates of other countries are presented under “Difference in tax rates in foreign companies” in the reconciliation of income tax and social contribution below. a) Reconciliations of income and social contribution taxes at statutory rates to amounts presented in the Statement of Income are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2021 |  | 2020 |  | 2019 |
Income (loss) before income taxes |  | 20,272,568 |  | 3,495,678 |  | 1,674,720 | ​
Statutory tax rates |  | 34 | % | 34 | % | 34 | %
Income and social contribution taxes at statutory rates |  | (6,892,673) |  | (1,188,531) |  | (569,405) | ​
Tax adjustment with respect to: |  |  |  |  |  |  | ​
- Difference in tax rates in foreign companies |  | 403,431 |  | 530,715 |  | 75,428 | ​
- Equity in earnings of unconsolidated companies |  | 191,474 |  | 51,873 |  | (5,797) | ​
- Interest on equity* |  | 406,022 |  | 98,739 |  | 69 | ​
- Interests on tax lawsuits** | ​ | 551,624 | ​ | — | ​ | — | ​
- Tax credits and incentives |  | 112,521 |  | 31,800 |  | 8,852 | ​
- Deferred tax assets not recognized / Realization, net | ​ | 482,497 | ​ | (587,917) | ​ | 1,097 | ​
- Other permanent differences, net |  | 31,474 |  | (44,303) |  | 31,923 | ​
Income and social contribution taxes |  | (4,713,630) |  | (1,107,624) |  | (457,833) | ​
Current |  | (4,306,223) |  | (908,051) |  | (240,400) | ​
Deferred |  | (407,407) |  | (199,573) |  | (217,433) | ​
* Brazilian Law 9,249/95 provides that a company may, at its sole discretion, consider dividends distributions to shareholders to be considered as interest on own capital — subject to specific limitations - which has the effect of a taxable deduction in the determination of income tax and social contribution. The limitation is the greater of (i) shareholders’ equity multiplied by the TJLP (Long-Term Interest Rate) rate or (ii) 50% of the net income in the fiscal year. This expense is not recognized for the purpose of preparing the financial statements and therefore does not impact net income. ** On September 24, 2021, the Federal Supreme Court finalized the judgment of Topic 962, deciding unanimously that the IR and CS levy was not due on the amounts related to interests (Selic rate) on tax lawsuits. Thus, the effects of such judgment were considered to the tax calculation applied to the interests recorded in the period, related to the tax credit arising from the final and unappealable decision of the actions that discussed the inclusion of ICMS in the PIS/COFINS calculation basis. b) Breakdown and changes in deferred income and social contribution tax assets and liabilities at statutory tax rates: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Balance as of | ​ | Recognized in | ​ | ​ | ​ | Comprehensive | ​ | Balance as of
​ |  | December 31, 2020 |  | income |  | Others |  | Income |  | December 31, 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tax loss carryforward | ​ | 1,220,485 | ​ | (556,480) | ​ | (24,312) | ​ | 10,156 | ​ | 649,849
Social contribution tax losses | ​ | 290,276 | ​ | (187,814) | ​ | 20,625 | ​ | — | ​ | 123,087
Provision for tax, civil and labor liabilities | ​ | 385,463 | ​ | 37,256 | ​ | — | ​ | 33 | ​ | 422,752
Benefits granted to employees | ​ | 392,257 | ​ | (35,812) | ​ | — | ​ | (57,828) | ​ | 298,617
Other temporary differences | ​ | 501,114 | ​ | (144,352) | ​ | — | ​ | 2,312 | ​ | 359,074
Deferred exchange variance* | ​ | 1,057,541 | ​ | 511,763 | ​ | — | ​ | 7 | ​ | 1,569,311
Provision for losses | ​ | 35,520 | ​ | 6,576 | ​ | — | ​ | (5,832) | ​ | 36,264
Fair value adjustments on businesses acquired | ​ | (550,864) | ​ | (38,544) | ​ | — | ​ | (39,213) | ​ | (628,621)
​ | ​ | 3,331,792 | ​ | (407,407) | ​ | (3,687) | ​ | (90,365) | ​ | 2,830,333
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-current assets | ​ | 3,393,354 | ​ | ​ | ​ |  | ​ | ​ | ​ | 2,929,308
Non-current liabilities | ​ | (61,562) | ​ | ​ | ​ |  | ​ | ​ | ​ | (98,975)
* Corresponds to deferred taxes over foreign exchange gains and loss which certain subsidiaries elected to tax on a cash basis ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Balance as of | ​ | Recognized in | ​ | Acquisition of | ​ | Comprehensive | ​ | Balance as of
​ |  | December 31, 2019 |  | income |  | subsidiary |  | Income |  | December 31, 2020
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tax loss carryforward | ​ | 1,341,464 | ​ | (157,207) | ​ | — | ​ | 36,228 | ​ | 1,220,485
Social contribution tax losses | ​ | 350,810 | ​ | (60,534) | ​ | — | ​ | — | ​ | 290,276
Provision for tax, civil and labor liabilities | ​ | 242,794 | ​ | 140,871 | ​ | — | ​ | 1,798 | ​ | 385,463
Benefits granted to employees | ​ | 294,031 | ​ | (6,848) | ​ | — | ​ | 105,074 | ​ | 392,257
Other temporary differences | ​ | 575,719 | ​ | (114,627) | ​ | — | ​ | 40,022 | ​ | 501,114
Deferred exchange variance* | ​ | 1,177,428 | ​ | (119,178) | ​ | — | ​ | (709) | ​ | 1,057,541
Provision for losses | ​ | 23,618 | ​ | 11,740 | ​ | — | ​ | 162 | ​ | 35,520
Fair value adjustments on businesses acquired | ​ | (452,058) | ​ | 106,210 | ​ | (86,093) | ​ | (118,923) | ​ | (550,864)
​ | ​ | 3,553,806 | ​ | (199,573) | ​ | (86,093) | ​ | 63,652 | ​ | 3,331,792
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-current assets | ​ | 4,071,219 | ​ |  | ​ |  | ​ |  | ​ | 3,393,354
Non-current liabilities | ​ | (517,413) | ​ |  | ​ |  | ​ |  | ​ | (61,562)
* | Corresponds to deferred taxes over foreign exchange gains and loss which certain subsidiaries elected to tax on a cash basis
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Balance as of | ​ | Recognized in | ​ | ​ | ​ | Comprehensive | ​ | Balance as of
​ |  | January 1, 2019 |  | income |  | Others |  | Income |  | December 31, 2019
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tax loss carryforward | ​ | 1,339,933 | ​ | 4,781 | ​ | (36,226) | ​ | 32,976 | ​ | 1,341,464
Social contribution tax losses | ​ | 337,258 | ​ | 13,552 | ​ | — | ​ | — | ​ | 350,810
Provision for tax, civil and labor liabilities | ​ | 270,417 | ​ | (27,848) | ​ | — | ​ | 225 | ​ | 242,794
Benefits granted to employees | ​ | 286,494 | ​ | (29,739) | ​ | — | ​ | 37,276 | ​ | 294,031
Other temporary differences | ​ | 525,818 | ​ | 73,067 | ​ | — | ​ | (23,166) | ​ | 575,719
Deferred exchange variance* | ​ | 1,284,377 | ​ | (106,640) | ​ | — | ​ | (309) | ​ | 1,177,428
Provision for losses | ​ | 83,837 | ​ | (75,142) | ​ | — | ​ | 14,923 | ​ | 23,618
Fair value adjustments on businesses acquired | ​ | (372,448) | ​ | (69,464) | ​ | — | ​ | (10,146) | ​ | (452,058)
​ | ​ | 3,755,686 | ​ | (217,433) | ​ | (36,226) | ​ | 51,779 | ​ | 3,553,806
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-current assets | ​ | 3,874,054 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4,071,219
Non-current liabilities | ​ | (118,368) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | (517,413)
* | Corresponds to deferred taxes over foreign exchange gains and loss which certain subsidiaries elected to tax on a cash basis
The recoverability analysis of deferred tax balances related to tax loss carryforward and social contribution tax losses performed by the Company and approved by its Board of Directors are based on its business plans and aligned with other projections and analysis performed by the Company as, for example, the impairment of assets tests. c) Unrecognized deferred income tax assets: ​ Due to the lack of expectation to use tax losses, negative social contribution base and deferred exchange variation arising from some operations in Brazil, the Company did not recognize a portion of tax assets of R$240,231 (R$764,845 on December 31, 2020), which do not have an expiration date. The subsidiaries abroad had R$1,256,438 (R$1,180,067 as of December 31, 2020) of tax credits on capital losses for which deferred tax assets have not been recognized and which expire between 2029 and 2035 and also several Unrecognized tax loss carryforwards from state credits in the United States in the amount of R$1,285,373 (R$1,623,459 as of December 31, 2020), which expire at various dates between 2022 and 2040.

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