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Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Taxes  
Income Taxes


Deferred income taxes are generally recognized, based on enacted tax rates, when assets and liabilities have different values for financial statement and tax purposes. Eve has calculated its income tax amounts using a separate return methodology. Under this method, Eve prepares the financial statements as if it will file separate returns with tax authorities. As a result, Eve’s deferred tax balances and effective tax rate as a stand-alone entity will likely differ significantly from those calculated in the actual consolidated return with Embraer. A valuation allowance is appropriate if it is more likely than not all or a portion of deferred tax assets will not be realized. The calculation of income taxes on a separate return basis requires a considerable amount of judgment and use of both estimates and allocations.

 

The tax loss carryforwards and valuation allowances reflected in the condensed consolidated financial statements are based on a hypothetical stand-alone income tax return basis and may not exist in the ERJ and EAH consolidated financial statements.


Our consolidated effective income tax rate was (3.6)% and (1.4)% for the three months ended September 30, 2023 and 2022, respectively. The effective income tax rate was (1.8)% and (0.4)% for the nine months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023, Eve has recognized a current income tax expense of $1,574,382 due to a year-to-date income in the Brazilian jurisdiction. The tax rate for 2023 is primarily driven by a full valuation allowance against the Company’s deferred tax assets due to historical and current losses incurred.