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Deferred income taxes
 12 Months Ended
Dec. 31, 2023
Notes and other explanatory information [abstract]  
Deferred income taxes

 

10.Deferred income taxes
10.1.Breakdown
             
               
          12.31.23   12.31.22
Assets              
Tax losses carryforward          2,532,720    2,800,162
Negative calculation basis (social contribution)         911,779    1,008,058
               
Temporary differences - Assets              
Provisions for tax, civil and labor risks         365,381   420,470
Expected credit losses         176,776   183,504
Impairment on tax credits           55,253     57,083
Provision for other obligations         115,216   146,652
Write-down to net realizable value of inventories           19,627     48,744
Employees' benefits plan         137,947   138,451
Lease basis difference         189,753   132,841
Other temporary differences         118,846     31,930
           4,623,298    4,967,895
               
Temporary differences - Liabilities              
Goodwill amortization basis difference           (336,135)     (323,005)
Depreciation (useful life) basis difference           (863,896)     (947,303)
Business combination (1)           (971,832)   (1,003,955)
Monetary correction by Hyperinflation          (95,981)    (85,997)
Unrealized gains on derivatives, net           (127,036)    (73,998)
Unrealized fair value gains, net           (163,744)    (71,617)
Other temporary differences          (11,691)   (7,022)
          (2,570,315)   (2,512,897)
               
Total deferred taxes          2,052,983    2,454,998
               
Total Assets          2,113,108    2,566,461
Total Liabilities          (60,125)     (111,463)
           2,052,983    2,454,998
(1)The deferred tax liability on business combination is substantially represented by the allocation of goodwill to property, plant and equipment, brands and contingent liabilities.

 

The Company has tax losses of Income Tax (IRPJ) and negative bases Contributions on the Net Profit (CSLL) in Brazil, which at current tax rates represent R$6,632,460 on December 31, 2023 (R$7,131,786 on December 31, 2022). Within this amount, R$3,394,679 on December 31, 2023 and (R$3,768,459 on December 31, 2022) are recognized as an asset, according to the recoverability expectation. The recoverability study uses financial projections made by Management for operational and financial results, which are in line with the recoverability test for cash-generating units (note 14.1).

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

             
               
          12.31.23   12.31.22
Beginning balance         2,454,998   2,917,560
Deferred income taxes recognized in income from continuing operations         244,172     (208,060)
Deferred income taxes recognized in other comprehensive income           (217,297)     (175,110)
Deferred income and social contribution taxes used in the leniency agreement (1)           (435,128)    -
Deferred taxes recognized in accumulated losses - monetary correction by hyperinflation          -    (32,655)
Other         6,238    (46,737)
Ending balance         2,052,983   2,454,998

(1)In June 2023, the Company used deferred taxes on tax losses in the amount of R$435,128 to settle the debt resulting from the Leniency Agreement entered into with the Federal Government (note 1.2).

 

10.2.Effective income tax rate reconciliation
               
                 
        31.12.23   31.12.22   31.12.21
                 
Loss before taxes - continued operations        (1,984,706)   (2,805,044)    (34,788)
Nominal tax rate       34%   34%   34%
Benefit at nominal rate        674,800   953,715     11,828
Adjustments to income taxes                
Income from associates and joint ventures        (1,110)    366    8,626
Difference of tax rates on results of foreign subsidiaries       (536,428)   212,753   244,822
Difference of functional currency of foreign subsidiaries       (190,743)     (538,002)   (129)
Deferred tax assets not recognized (1)       -     (967,103)     (840,457)
Recognition of tax assets from previous years       61,348    (77,964)    1,025,000
Interest on taxes        140,056     83,235   104,789
Profits taxed by foreign jurisdictions       (110,655)    (31,400)    (33,455)
Transfer price       (101,554)    (24,995)    (71,634)
Tax paid on international subsidiaries       26,416     21,061     -
Investment grant        118,793   114,913   109,591
Other permanent differences       34,931    (32,213)   (6,879)
Total        115,854     (285,634)   552,102
                 
Effective rate       5.8%   -10.2%   1587.0%
                 
Current tax       (128,318)    (77,574)     (255,642)
Deferred tax        244,172     (208,060)   807,744

(1)Amount related to the non-recognition of deferred tax on tax losses carryforward, due to limited capacity of realization.

 

Income tax returns in Brazil are subject to review by the tax authorities for a period of five years from the date of their delivery. The Company may be subject to additional collection of taxes, fines and interest as a result of these reviews. The results obtained by subsidiaries abroad are subject to taxation in accordance with the tax laws of each country.