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INCOME AND SOCIAL CONTRIBUTION TAXES | 12 Months Ended
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Dec. 31, 2022
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, 2022, 2021 and 2020. 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: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2022 |  | 2021 |  | 2020 |
Income (loss) before income taxes |  | 15,859,027 |  | 20,272,568 |  | 3,495,678 | ​
Statutory tax rates |  | 34 | % | 34 | % | 34 | %
Income and social contribution taxes at statutory rates |  | (5,392,069) |  | (6,892,673) |  | (1,188,531) | ​
Tax adjustment with respect to: |  | ​ |  |  |  |  | ​
- Difference in tax rates in foreign companies |  | 66,851 |  | 403,431 |  | 530,715 | ​
- Equity in earnings of unconsolidated companies |  | 391,621 |  | 191,474 |  | 51,873 | ​
- Interest on equity (Note 2.14) |  | 566,740 |  | 406,022 |  | 98,739 | ​
- Interests on tax lawsuits* | ​ | 20,442 | ​ | 551,624 | ​ | — | ​
- Tax credits and incentives |  | 36,779 |  | 112,521 |  | 31,800 | ​
- Deferred tax assets not recognized / Realization, net | ​ | 58,402 | ​ | 482,497 | ​ | (587,917) | ​
- Other permanent differences, net | ​ | (128,241) |  | 31,474 |  | (44,303) | ​
Income and social contribution taxes |  | (4,379,475) |  | (4,713,630) |  | (1,107,624) | ​
Current | ​ | (3,709,414) | ​ | (4,306,223) | ​ | (908,051) | ​
Deferred |  | (670,061) |  | (407,407) |  | (199,573) | ​
​ * 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 | ​ | Acquisition of | ​ | Comprehensive | ​ | Balance as of
​ |  | January 1, 2020 |  | 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
​ |  | 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 | ​ | ​ | ​ | Comprehensive | ​ | Balance as of
​ |  | December 31, 2021 |  | income |  | Others |  | Income | ​ | December 31, 2022
Tax loss carryforward | ​ | 649,849 | ​ | 17,112 | ​ | 41 | ​ | (27,956) | ​ | 639,046
Social contribution tax losses | ​ | 123,087 | ​ | 50,492 | ​ | — | ​ | — | ​ | 173,579
Provision for tax, civil and labor liabilities | ​ | 422,752 | ​ | 108,240 | ​ | (5,295) | ​ | (539) | ​ | 525,158
Benefits granted to employees | ​ | 298,617 | ​ | (88) | ​ | — | ​ | (98,756) | ​ | 199,773
Other temporary differences | ​ | 359,074 | ​ | (191,137) | ​ | — | ​ | 179,114 | ​ | 347,051
Deferred exchange variance* | ​ | 1,569,311 | ​ | (735,097) | ​ | — | ​ | 121 | ​ | 834,335
Provision for losses | ​ | 36,264 | ​ | 7,607 | ​ | — | ​ | (134) | ​ | 43,737
Fair value adjustments on businesses acquired | ​ | (628,621) | ​ | 72,810 | ​ | (3,142) | ​ | (135,590) | ​ | (694,543)
​ | ​ | 2,830,333 | ​ | (670,061) | ​ | (8,396) | ​ | (83,740) | ​ | 2,068,136
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-current assets | ​ | 2,929,308 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 2,164,477
Non-current liabilities | ​ | (98,975) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | (96,341)
* 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) Estimated recovery and reversal of income and social contribution tax assets and liabilities are as follows: ​
​ | ​ | ​ | ​ | ​
​ |  | Assets
​ |  | 2022 |  | 2021
2022 |  | — |  | 936,839
2023 |  | 622,110 |  | 465,361
2024 |  | 458,222 |  | 429,675
2025 |  | 435,473 |  | 420,408
2026 |  | 221,496 |  | 187,700
2027 on |  | 427,176 |  | 489,325
​ |  | 2,164,477 |  | 2,929,308
​ | ​ | ​ | ​ | ​
​ |  | Liabilities
​ |  | 2022 |  | 2021
2022 |  | — |  | —
2023 |  | — |  | (39,761)
2024 |  | (46,976) |  | (36,927)
2025 |  | (29,100) |  | (20,861)
2026 |  | (7,259) |  | (1,426)
2027 on |  | (13,006) |  | —
​ |  | (96,341) |  | (98,975)
​ d) Tax Assets not booked: ​ 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$ 239,989 (R$ 240,231 on December 31, 2021), which do not have an expiration date. The subsidiaries abroad had R$ 1,105,130 (R$ 1,256,438 as of December 31, 2021) 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$ 334,475 (R$ 1,285,373 as of December 31, 2021), which expire at various dates between 2023 and 2044.

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