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Income taxes | 12 Months Ended
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Dec. 31, 2021
Disclosure of temporary difference, unused tax losses and unused tax credits [abstract] |
Income taxes | Income taxes Income taxes are comprised of taxation over operations in Brazil and abroad, related to Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL). According to Brazilian tax law, income taxes and social contribution are assessed and paid by legal entity and not on a consolidated basis. 10.1. Reconciliation of income tax expense The following is a reconciliation of income tax expense to profit (loss) for the year, calculated by applying the combined Brazilian statutory rates at 34% for the years ended December 31, 2021, 2020 and 2019:
| 2021 |  | 2020 |  | 2019
Profit (loss) before income taxes | (1,445,554) |  |  | 1,127,662 |  |  | 1,090,655 |
Brazilian statutory rate | 34 | % |  | 34 | % |  | 34 | %
Tax benefit/(expense) at the statutory rate | 491,488 |  |  | (383,405) |  |  | (370,823) |
Additions (exclusions): |  |  |  |  |
Mark-to-market on equity securities designated at FVPL | (429,832) |  |  | — |  |  | — |
Gain (loss) from entities not subject to the payment of income taxes | 3,931 |  |  | 98,376 |  |  | 47,782 |
Other permanent differences | 4,325 |  |  | (4,777) |  |  | 6,039 |
Equity pickup on associates | (3,548) |  |  | (2,359) |  |  | (275) |
Unrecorded deferred taxes | (40,165) |  |  | (31,531) |  |  | (2,030) |
Use of tax losses previously unrecorded | — |  |  | — |  |  | 5,163 |
Unrealized gain on previously held interest on acquisition | 6,161 |  |  | 1,017 |  |  | — |
Interest payments on net equity | 5,933 |  |  | 12,276 |  |  | 10,102 |
Previsouly unrecognized deferred income tax (temporary differences and tax losses) | 22,492 |  |  | — |  |  | — |
R&D Tax Benefits | 4,688 |  |  | 13,107 |  |  | 8,188 |
Other tax incentives | 2,733 |  |  | 7,080 |  |  | 9,394 |
Total income tax and social contribution benefit/(expense) | 68,206 |  |  | (290,216) |  |  | (286,460) |
Effective tax rate | 5 | % |  | 26 | % |  | 26 | %
Current income tax and social contribution | (171,621) |  |  | (216,886) |  |  | (217,228) |
Deferred income tax and social contribution | 239,827 |  |  | (73,330) |  |  | (69,232) |
Total income tax and social contribution benefit/(expense) | 68,206 |  |  | (290,216) |  |  | (286,460) |
10.2 .Changes in deferred income taxes Net changes in deferred income taxes relate to the following:
| 2021 |  | 2020
At January 1 | 77,611 |  |  | 182,094 |
Assets at FVOCI | 102,295 |  |  | (14,020) |
Additions arising from business combinations | (605,423) |  |  | (17,133) |
Amounts recognized in income statement: |  |  |
Losses available for offsetting against future taxable income | 160,287 |  |  | (39,949) |
Tax credit carryforward | (12,377) |  |  | 51,063 |
Tax deductible goodwill | (12,225) |  |  | (12,226) |
Share-based compensation | 8,457 |  |  | 6,535 |
Temporary differences under FIDC | (3,020) |  |  | 1,563 |
Amortization of assets arising from business combinations | 27,872 |  |  | 8,981 |
Assets at FVPL | 70,705 |  |  | (69,357) |
Technological innovation benefit | (3,061) |  |  | (5,968) |
Others | 3,189 |  |  | (13,972) |
At December 31 | (185,690) |  |  | 77,611 |
10.3. Deferred income taxes by nature Under Brazilian tax law, temporary differences and tax losses can be carried forward indefinitely, however the tax losses can only be used to offset up to 30% of taxable profit for the year.
| 2021 |  | 2020
Losses available for offsetting against future taxable income | 244,868 |  |  | 84,581 |
Deferred tax on other temporary differences | 73,618 |  |  | 85,995 |
Assets at FVOCI | 127,335 |  |  | 25,040 |
Tax deductible goodwill | 36,676 |  |  | 48,901 |
Share-based compensation | 41,150 |  |  | 32,693 |
Temporary differences under FIDC | (69,556) |  |  | (66,536) |
Deferred income taxes arising from business combinations | (616,665) |  |  | (39,113) |
Assets at FVPL | (4,583) |  |  | (75,288) |
Technological innovation benefit | (18,493) |  |  | (15,432) |
Others | (40) |  |  | (3,230) |
Deferred tax, net | (185,690) |  |  | 77,611 |
10.4. Unrecognized deferred taxes The Group has accumulated tax loss carryforwards and other temporary differences in some subsidiaries in the amount of R$104,920 (December 31, 2020 – R$36,906) for which a deferred tax asset was not recognized and are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognized with respect of these losses as they cannot be used to offset taxable profits between subsidiaries of the Group, and there is no other evidence of recoverability in the near future.

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