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Current and deferred tax (Tables) | 12 Months Ended
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Dec. 31, 2021
Text Block [Abstract] |
Summary of Deferred Tax Assets | Deferred tax assets The balance comprises temporary differences attributable to:
|  | December 31, 2021 |  |  | December 31, 2020 |
Acquisition of subsidiaries |  |  | 1,687 |  |  |  | 544 |
Temporary differences |  |  | 283 |  |  |  | 187 |
Others |  |  | 75 |  |  |  | — |
Total deferred tax liabilities |  |  | 2,045 |  |  |  | 731 |
|  | December 31, 2021 |  |  | December 31, 2020 |
Loss allowances for financial assets |  |  | 75 |  |  |  | 124 |
Bonus provision |  |  | 750 |  |  |  | 655 |
Lease (i) |  |  | 366 |  |  |  | 108 |
Share-based compensation (ii) |  |  | 3,224 |  |  |  | 185 |
Hyperinflationary adjustments |  |  | 89 |  |  |  | 99 |
Tax loss (iii) |  |  | 6,445 |  |  |  | 427 |
Others (iv) |  |  | 1,623 |  |  |  | 576 |
Total deferred tax assets |  |  | 12,572 |  |  |  | 2,174 |
(i) | VTEX takes the approach of considering the lease as a single transaction in which the asset and liability are integrally linked, so differences arising on settlement of the liability and the amortization of the leased asset give rise to a net temporary difference on which deferred tax is recognized.
(ii) | The increase in the amounts accounted as deferred tax assets for share-based compensation is justified mainly by the new programs granted in Brazil for RSUs, as disclosed in note 25.1. These amounts are treated as temporary differences until the program is vested.
(iii) | Tax losses increase is driven mainly by the current investment position of the Brazilian operations. These amounts are expected to be offset in the foreseeable future. In Brazil, tax losses are not subject to statute of limitation and ought to be used observing the limits established by the local tax legislation.
(iv) | Most of the amounts appointed as Others in the deferred tax assets reconciliation correspond to temporary differences arising from operations carried out in Brazil. It refers to provision for sales commission, unrealized exchange variation, adjustments for operations marked to market (MTM), and provision for payment of suppliers. The remainder portion refers to a miscellaneous of items scattered in concepts determined by local tax laws in Argentina, Brazil, Chile, and Colombia.
Summary of Movement on Deferred Tax Assets | The movement on deferred tax assets balance is as follows:
Movements |  | Loss allowances for financial assets |  |  | Bonus provision |  |  | Lease |  |  | Share-based compensation |  |  | Hyperinflationary adjustments |  |  | Tax Loss |  |  | Other |  |  | Total |
At January 1, 2020 |  |  | 269 |  |  |  | 629 |  |  |  | 60 |  |  |  | — |  |  |  | 57 |  |  |  | — |  |  |  | 316 |  |  |  | 1,331 |
(Charged)/Credited To profit and loss (i) |  |  | (145 | ) |  |  | 26 |  |  |  | 48 |  |  |  | 185 |  |  |  | 42 |  |  |  | 427 |  |  |  | 260 |  |  |  | 843 |
At December 31, 2020 |  |  | 124 |  |  |  | 655 |  |  |  | 108 |  |  |  | 185 |  |  |  | 99 |  |  |  | 427 |  |  |  | 576 |  |  |  | 2,174 |
(Charged)/Credited To profit and loss (i) |  |  | (49 | ) |  |  | 95 |  |  |  | 258 |  |  |  | 2,852 |  |  |  | (10 | ) |  |  | 6,018 |  |  |  | 1,047 |  |  |  | 10,211 |
To equity |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 187 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 187 |
At December 31, 2021 |  |  | 75 |  |  |  | 750 |  |  |  | 366 |  |  |  | 3,224 |  |  |  | 89 |  |  |  | 6,445 |  |  |  | 1,623 |  |  |  | 12,572 |
(i) | The differences between the amounts shown in the table above and the statements of profit or loss correspond to exchange rate variation.
Summary of Movement on Deferred Tax Liabilities | The movement on deferred tax liabilities balance is as follows:
Movements |  | Goodwill |  |  | Customer relationship |  |  | Intellectual property |  |  | Others |  |  | Total |
At January 1, 2020 |  |  | — |  |  |  | 325 |  |  |  | — |  |  |  | — |  |  |  | 325 |
Acquisition of subsidiaries (i) |  |  |  |  |  |  |  |  |  |  | 219 |  |  |  | — |  |  |  | 219 |
Movements |  | Goodwill |  |  | Customer relationship |  |  | Intellectual property |  |  | Others |  |  | Total |
To profit and loss |  |  | 187 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 187 |
At December 31, 2020 |  |  | 187 |  |  |  | 325 |  |  |  | 219 |  |  |  | — |  |  |  | 731 |
Acquisition of subsidiaries (i) |  |  | — |  |  |  | 1,424 |  |  |  | 65 |  |  |  | 59 |  |  |  | 1,548 |
To profit and loss |  |  | 96 |  |  |  | (285 | ) |  |  | (61 | ) |  |  | 16 |  |  |  | (234 | )
At December 31, 2021 |  |  | 283 |  |  |  | 1,464 |  |  |  | 223 |  |  |  | 75 |  |  |  | 2,045 |
(i) | The impact of deferred tax liabilities due to acquisition of subsidiaries increases the goodwill on the acquisition date.
Summary of Income Tax Expense | Income Tax expense
|  | December 31, 2021 |  |  | December 31, 2020 |  |  | December 31, 2019 |
Current tax |  |  |  |  |  |  |  |  |  |  |  |
Current tax on profits for the year |  |  | (1,646 | ) |  |  | (4,904 | ) |  |  | (1,015 | )
|  |  | (1,646 | ) |  |  | (4,904 | ) |  |  | (1,015 | )
Deferred income tax |  |  |  |  |  |  |  |  |  |  |  |
Increase in deferred tax |  |  | 11,118 |  |  |  | 616 |  |  |  | 132 |
|  |  | 11,118 |  |  |  | 616 |  |  |  | 132 |
Income tax |  |  | 9,472 |  |  |  | (4,288 | ) |  |  | (883 | )
Summary of Reconciliation of Benefit (Expenses) of Income Tax and Social Contribution | Reconciliation of benefit (expenses) of income tax and social contribution
|  | December 31, 2021 |  |  | December 31, 2020 |  |  | December 31, 2019 |
Profit (Loss) before income tax |  |  | (69,986 | ) |  |  | 3,463 |  |  |  | (3,693 | )
Tax at the Brazilian tax rate of 34% (i) |  |  | 23,795 |  |  |  | (1,177 | ) |  |  | 1,256 |
Tax effect of amounts which are not deductible (taxable) in calculating taxable income: |  |  |  |  |  |  |  |  |  |  |  |
Technological innovation incentive law ( Lei do bem ) (ii) |  |  | — |  |  |  | 661 |  |  |  | 70 |
Restricted stock units |  |  | 451 |  |  |  | — |  |  |  | — |
Equity result |  |  | (1,232 | ) |  |  | 1,122 |  |  |  | (70 | )
Difference to presumed tax regime |  |  | (1,047 | ) |  |  | (317 | ) |  |  | — |
Stock-option |  |  | (87 | ) |  |  | (598 | ) |  |  | (245 | )
|  | December 31, 2021 |  |  | December 31, 2020 |  |  | December 31, 2019 |
Unrecognized deferred tax assets (iii) |  |  | (8,438 | ) |  |  | (1,753 | ) |  |  | (820 | )
Tax rate reconciliation (i) |  |  | (3,945 | ) |  |  | (1,050 | ) |  |  | (859 | )
Other net differences |  |  | (25 | ) |  |  | (1,176 | ) |  |  | (21 | )
Income tax and social contribution for the year |  |  | 9,472 |  |  |  | (4,288 | ) |  |  | (883 | )
Effective rate - % |  |  | (13.53 | %) |  |  | (123.82 | %) |  |  | 23.91 | %
(i) | The tax expense was determined based on the Brazilian corporate income tax (CIT) rate considering that, currently, the Group’s biggest operation is in Brazil. This table reconciles the expected income tax expense, computed by applying the combined Brazilian tax rate of 34%, to the actual income tax expense. The Group’s combined Brazilian tax rate includes the corporate income tax at a 25% rate and the social contribution on net profits at a 9% rate. Differences between local income tax rates to the Brazilian income tax rate were allocated to “Tax rate reconciliation”. Apart from Brazil, the Group’s biggest operations are in the US, the UK and Argentina, which CIT rates in 2021 were 21%, 19% and 35%, respectively. Nonetheless, the result represents an incremental tax expense because some of non-Brazilian operations were loss making, therefore reducing the consolidated earnings before income tax.
(ii) | Benefit related to the inclusion of research and development (technological innovation) expenses in the income tax basis for years 2020 as provided for by Law No. 11.196/05 - known as Lei do Bem . For 2021, considering that VTEX Brasil was in a loss position, the R&D benefit did not apply.
(iii) | Unrecognized deferred tax assets correspond to the tax benefit related to future utilization of net operating losses of certain operations, mainly the United States. In those cases, the deferred tax asset was not recognized due to the lack of expectation of utilization of such net operating losses in the foreseeable future. The balance of the accumulated net operating losses of the Group’s US operations totaled USD 8,240 on 31st December 2020 and USD 25,963 on 31st December 2021, or a total tax benefit of approximately USD 1.7 million and USD 5,452, respectively, taking into account the current US corporate income tax rate of 21%. The balance of the accumulated net operating losses of the Group’s UK operation totaled USD 5,256 on 31st December 2020 and USD 21,889 on 31st December 2021, or a total tax benefit of approximately USD 998 and USD 5,472, respectively, taking into account the current UK corporate income tax rate of 19% and 25% (expected to be in force from 2022 onwards).

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