Current and deferred tax (Tables)

12 Months Ended

Dec. 31, 2022

Deferred tax assets

The balance comprises temporary differences attributable to:


	December 31, 2022		December 31, 2021

Acquisition of subsidiaries		1,409		1,687
Temporary differences		827		283
Others		228		75

Total deferred tax liabilities		2,464		2,045


	December 31, 2022		December 31, 2021
Loss allowances for financial assets		270		75
Bonus provision		1,712		750
Lease		392		366
Share-based compensation (i)		3,130		3,224
Hyperinflationary adjustments		37		89
Tax loss (ii)		10,513		6,445
Others (iii)		1,656		1,623

Total deferred tax assets		17,710		12,572

(i)	Mainly related to RSU amounts that are treated as temporary differences until the instrument is vested.

(ii)

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.

(iii)

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 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

(Charged)/Credited to profit and loss (i)		195			962		26		(152	)		(52	)		4,068		33		5,080
To equity		—			—		—		58			—			—		—		58

At December 31, 2022		270			1,712		392		3,130			37			10,513		1,656		17,710

(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

follows:


Movements	Goodwill		Customer relationship			Intellectual property			Others		Total
At December 31, 2020		187		325			219			—		731

Acquisition of subsidiaries (i)		—		1,424			65			59		1,548
Charged/(Credited) to profit and loss		96		(285	)		(61	)		16		(234	)

At December 31, 2021		283		1,464			223			75		2,045

Charged/(Credited) to profit and loss		544		(218	)		(60	)		153		419

At December 31, 2022		827		1,246			163			228		2,464

(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, 2022			December 31, 2021			December 31, 2020
Current tax
Current tax on profits for the year		(877	)		(1,646	)		(4,904	)

		(877	)		(1,646	)		(4,904	)

Deferred income tax
Decrease in deferred tax		4,902			11,118			616

		4,902			11,118			616
Income tax		4,025			9,472			(4,288	)

Summary of Reconciliation of Benefit (Expenses) of Income Tax and Social Contribution

Reconciliation of benefit (expenses) of income tax and social contribution


	December 31, 2022			December 31, 2021			December 31, 2020

Profit (Loss) before income tax		(56,444	)		(69,986	)		3,463

Tax at the Brazilian tax rate of 34% (i)		19,191			23,795			(1,177	)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Technological innovation incentive law ( Lei do bem ) (ii)		—			—			661
Restricted stock units		1,398			451			—
Equity result		329			(1,232	)		1,122
Difference to presumed tax regime		—			(1,047	)		(317	)
Stock option		(53	)		(87	)		(598	)
Unrecognized deferred tax assets (iii)		(9,465	)		(8,438	)		(1,753	)
Tax rate reconciliation (i)		(6,381	)		(3,945	)		(1,050	)
Other net differences		(994	)		(25	)		(1,176	)

Income tax and social contribution for the year		4,025			9,472			(4,288	)

Effective rate - %		(7.13	%)		(13.53	%)		(123.82	%)

(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

%, 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 Argentina, the US and Colombia, which CIT rates in 2022 were 35%, 21% 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 year 2020 as provided for by Law No. 11.196/05 - known as Lei do Bem . For 2021 and 2022, 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 and the United Kingdom. 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 US$55,780 on December 31, 2022 and US$25,963 on December 31, 2021, or a total tax benefit of approximately US$11,714 and US$5,452, respectively, taking into account the current US corporate income tax rate of

%. The balance of the accumulated net operating losses of the Group’s UK operation totaled US$46,463 on December 31, 2022 and US$21,889 on December 31, 2021, or a total tax benefit of approximately US$9,398 and US$4,159

, respectively

taking into account the current UK corporate income tax rate of 19%.