Income tax and social contribution (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Deferred 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, 2016		1,051			3,606			(24,378	)		3,647		—			(16,074	)
Included in the statement of income		(874	)		—			(4,354	)		2,759		—			(2,468	)

At March 31, 2017		177			3,606			(28,732	)		6,406		—			(18,542	)

Included in the statement of income		1,310			(721	)		(12,460	)		26,236		(1,616	)		12,748

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

Included in the statement of income		3,934			(180	)		(11,344	)		23,054		(9,073	)		6,391

At March 31, 2018		5,421			2,705			(52,536	)		55,696		(10,689	)		597

(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.

(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.

Estimated realization of deferred tax assets in non-current assets and liabilities

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


	March 31, 2018					December 31, 2017
	Assets		Liability			Assets		Liability
2018		24,883		(24,509	)		8,895		(20,728	)
2019		7,974		(21,789	)		4,040		(18,008	)
2020		6,045		(6,235	)		2,111		(2,454	)
2021		982		(4,999	)		982		(1,434	)
2022		23,938		(5,694	)		20,987		(185	)

		63,822		(63,226	)		37,015		(42,809	)

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	)

Reconciliation of the difference between the actual income tax and social contribution expense and the expense computed by applying the federal statutory rate

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

At March 31, 2018 and 2017, the 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 Brazilian federal statutory rate for the three-month periods ended March 31, 2018 and 2017:


	March 31, 2018			March 31, 2017
Profit for the period before taxes		163,000			82,177
Statutory rate		34%			34%

Expected income tax and social contribution		(55,420	)		(27,940	)
Income tax and social contribution effect on:
Permanent additions (exclusions)
Gifts and other non-deductible expenses		(364	)		(37	)
Research & development and technological innovation benefit—Law 11.196/05 (i)		13,553			5,551
No taxable earnings (ii)		30,916			—
Other additions		(3,228	)		874

Income tax and social contribution expense		(14,544	)		(21,552	)

Effective rate		9%			26%
Income tax and social contribution—current		(20,935	)		(19,085	)
Income tax and social contribution—deferred		6,391			(2,468	)

(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 the PagSeguro Group on some specific property and equipment.

(ii)

Refers to the benefit granted by based on the local law of Cayman (The Companies Law of 1960), there is no taxation on the income earned in the companies based in this locality. As a result of the local tax regulations, all the exchange variantions from dolar to reais which generates income has no tax impacts for the PagSeguro Digital.

(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.