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10. DEFERRED INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

Deferred Income Taxes

Schedule of deferred income and social contribution taxes


	12.31.20		12.31.19
Assets
Tax loss carryforwards	2,060,846		1,785,027
Negative calculation basis (social contribution)	772,283		682,175

Temporary differences - Assets
Provisions for tax, civil and labor risks	458,019		477,538
Suspended collection taxes	1,871		31,069
Expected credit losses	194,977		164,332
Impairment on tax credits	67,900		60,797
Provision for other obligations	115,959		64,661
Employees' profit sharing	86,752		66,166
Write-down to net realizable value of inventories	19,189		18,718
Employees' benefits plan	216,510		202,228
Lease basis difference	86,308		37,492
Other temporary differences	40,028		135,940
	4,120,642		3,726,143

Temporary differences - Liabilities
Difference on tax x accounting basis for goodwill amortization	(320,729)		(319,592)
Difference on tax x accounting basis for depreciation (useful life)	(851,436)		(802,844)
Business combination (1)	(761,429)		(640,318)
Unrealized gains on derivatives, net	(42,493)		(43,428)
Unrealized fair value gains, net	(39,269)		(11,998)
Other temporary differences	(22,749)		(77,903)
	(2,038,105)		(1,896,083)

Total deferred taxes	2,082,537		1,830,060

Total Assets	2,109,064		1,915,370
Total Liabilities	(26,527)		(85,310)
	2,082,537		1,830,060

(1)

The deferred tax asset on the Sadia business combination was recorded on the amortization difference between the accounting and tax goodwill calculated as of the purchase price allocation date. The deferred tax liability on the Sadia business combination is substantially represented by the allocation of goodwill to property, plant and equipment, brands and contingent liabilities.

Schedule of rollforward deferred tax

The roll-forward of deferred income taxes, net, is set forth below:


	12.31.20		12.31.19
Beginning balance	1,830,060		1,453,878
Deferred taxes on profit recognized in income	172,763		290,094
Deferred income taxes recognized in other comprehensive income	32,070		60
Deferred income taxes related to discontinued operations	-		116,883
Other (1)	47,644		(30,855)
Ending balance	2,082,537		1,830,060

(1)

Mainly related to the foreign exchange variation effect on the balances in foreign companies.

Schedule of deferred tax

The recoverability study is reviewed by the Fiscal Council and approved by the Board of Directors. Based on this estimate, Management believes that it is probable that these deferred tax credits will be realized, as presented below:


2021	55,306
2022	140,612
2023	231,408
2024	291,677
2025	335,681
2026 to 2028	1,035,323
2029 onwards	743,122
	2,833,129

Schedule of income and social contribution taxes reconciliation


	12.31.20		12.31.19		12.31.18

Income before taxes	1,352,234		882,938		(2,447,808)
Nominal tax rate	34%		34%		34%
Expense at nominal rate	(459,759)		(300,199)		832,255
Adjustments to income taxes
Income from associates and joint ventures	-		73,995		6,023
Difference of tax rates on results of foreign subsidiaries	955,324		(74,172)		277,088
Difference of functional currency of foreign subsidiaries	1,142,762		73,380		112,379
Deferred tax assets not recognized (1)	(1,481,478)		(38,464)		(347,116)
Share-based payment	(22,774)		(14,172)		(5,842)
Transfer price	(40,568)		(16,966)		(79,043)
Penalties	(5,261)		(48,633)		(1,626)
Investment grant	52,279		64,127		59,236
Write-off of non-realizable tax assets - SHB incorporation	-		-		(268,701)
Reversal (recognition) of provision with no deferred tax constituted	-		481,356		(244,591)
Other permanent differences	32,238		(4,857)		(6,760)
	172,763		195,395		333,302

Effective rate	-12.8%		-22.1%		13.6%

Current tax	(77,373)		(94,699)		(6,842)
Deferred tax	250,136		290,094		340,144

(1)

Amount related to the non-recognition of deferred tax on tax losses carryforward in the amount of R$4,357,288, due to limited capacity of realization (note 10.2).