18. Income tax and social contribution

(a) Deferred income tax and social contribution:


	Tax losses			Tax credit			Technological inovation (i)			Other temporary differences- ASSETS		Other temporary differences- LIABILITY			Total
Deferred tax
At December 31, 2015		3,363			-			(6,257	)		3,363		-			469
Included in the statement of income		(2,312	)		-			(18,121	)		284		-			(20,149	)
Taken directly to equity		-			3,606			-			-		-			3,606

At December 31, 2016		1,051			3,606			(24,378	)		3,647		-			(16,074	)

Included in the statement of income		436			(721	)		(16,814	)		28,995		(1,616	)		10,278

At December 31, 2017		1,487			2,885			(41,192	)		32,642		(1,616	)		(5,794	)

(i) The main temporary differences representing the balance of the deferred tax liability refers to the benefit granted by the Technological Innovation Law (Lei do Bem), which reduces the tax charges on the capitalized amount of property and equipment.

Deferred tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. Tax losses do not have expiration date.

The estimated realization of deferred tax assets in non-current assets and liabilities is as follows:


	December 31,
	2017					2016
	Asset		Liability			Asset		Liability
2017		-		-			940		(8,126	)
2018		8,895		(20,728	)		940		(8,126	)
2019		4,040		(18,008	)		940		(8,126	)
2020		2,111		(2,454	)		940		-
2021		982		(1,434	)		4,545		-
2022		20,987		(185	)		-		-

		37,015		(42,809	)		8,305		(24,378	)

(b) Reconciliation of the income tax and social contribution expense

PagSeguro Group computed income tax and social contribution under the taxable income method. The following is a reconciliation of the difference between the actual income tax and social contribution expense and the expense computed by applying the federal statutory rate for the years ended December 31, 2017, 2016 and 2015:


	December, 31
	2017			2016			2015
Profit for the period before taxes		683,504			155,359			40,315
Statutory rate		34%			34%			34%

Expected income tax and social contribution		(232,391	)		(52,822	)		(13,707	)
Income tax and social contribution effect on:
Permanent additions (exclusions)
Participation in the results of partners and managers		(314	)		-			(234	)
Gifts		(375	)		-			(149	)
R&D and technological innovation benefit - Law 11.196/05(i)		24,987			15,898			11,596
R&D and technological innovation benefit - Law 11.196/05(i)		24,987			15,898			11,596
Interest on own capital		-			8,860			-
Tax Incentives - Law Rounet Art. 18		1,981			-			-
Other additions		1,402			485			(2,333	)

Income tax and social contribution expense		(204,711	)		(27,580	)		(4,826	)

Income tax and social contribution - current		(214,988	)		(7,431	)		(2,587	)
Income tax and social contribution - deferred		10,278			(20,149	)		(2,239	)

(i) Refers to the benefit granted by the Technological Innovation Law (Lei do Bem), which reduces the income tax charges, based on the amount invested by PagSeguro Group on some specific property and equipment.