AB InBev Financial Results
Ambev and its subsidiaries have also been receiving charges from the Brazilian Federal Tax Authorities in relation to (i)
federal taxes allegedly unduly offset with the disallowed presumed IPI excise tax credits that are under discussion in these
proceedings and (ii) PIS/COFINS amounts allegedly due on Arosuco's remittance to Ambev subsidiaries.
In April 2019, the Federal Supreme Court ("STF") announced its judgment on Extraordinary Appeal No. 592.891/SP and
596.614/SP, with binding effects, deciding on the rights of taxpayers registering IPI excise tax presumed credits on
acquisitions of raw materials and exempted inputs originating from the Manaus Free Trade Zone. As a result of this
decision, Ambev reclassified part of the amounts related to the IPI cases as remote losses maintaining as possible losses
only issues related to other additional discussions that were not included in the analysis of the STF. The cases are being
challenged at both the administrative and judicial levels.
Ambev management estimates the possible loss related to these assessments to be approximately 5.9 billion Brazilian
real (1.1 billion US dollar) as of 31 December 2022. Ambev has not recorded any provision in connection therewith.
In addition, Ambev and its subsidiaries have been charged isolated fines due to the non-recognition of tax offsets. The
constitutionality of this penalty is under review at the Supreme Court of Justice. The updated assessed amount as of 31
December 2022 is approximately 0.2 billion Brazilian real (0.1 billion US dollar). Ambev has not recorded any provisions
for this matter as it considers the chance of loss to be possible.
IPI Suspension
In 2014 and 2015, Ambev received tax assessments from the Brazilian Federal Tax Authorities relating to IPI allegedly
due over remittances of manufactured goods to other related factories. The cases are being challenged at both the
administrative and judicial levels. In 2020, Ambev received a final partially favorable decision at the administrative level in
one of the cases. In July 2022, Ambev received the first judicial decision on this matter; the decision was unfavorable to
Ambev and it has filed an appeal.
In October 2022, the Upper Administrative Court rendered a partially favorable decision to Ambev in one of the cases
related to this matter. Ambev awaits formal notification of this decision to assess whether any portion of the tax assessment
may be challenged at the judicial level.
Ambev management estimates the possible loss related to these assessments to be approximately 1.7 billion Brazilian
real (0.3 billion US dollar) as of 31 December 2022. Ambev has not recorded any provision in connection therewith.
ICMS tax credits
Ambev is currently challenging tax assessments issued by the states of São Paulo, Rio de Janeiro, Minas Gerais, among
others, questioning the legality of ICMS tax credits arising from transactions with companies that have tax incentives
granted by other states. The cases are being challenged at both the administrative and judicial level of the courts. On
August 2020, the STF issued a binding decision (Extraordinary Appeal No. 628.075) ruling that tax credits granted by the
states in the context of the ICMS tax war shall be considered unlawful. The decision also recognized that the states should
abide by the tax incentives validation process provided for in Complementary Law No. 160/17. This decision became final
(and no longer subject to appeal) in December 2021 and it does not change the likelihood of loss in Ambev's tax
assessments. With respect to the assessments issued by the State of São Paulo, Ambev received unfavorable decisions
at the second administrative level in April, May and June 2022. In these cases, Ambev has filed appeals to the second
administrative level.
Ambev management estimates the possible losses related to these assessments to be approximately 1.7 billion Brazilian
real (0.3 billion US dollar) as of 31 December 2022. Ambev has not recorded any provision in connection therewith.
In addition, in 2018 and 2021, Ambev received tax assessments from the States of Rio Grande do Sul and São Paulo
charging alleged differences in ICMS due to the disallowance of credits arising from transactions with suppliers located in
the Manaus Free Trade Zone. With regard to the assessment issued by the State of Rio Grande do Sul, Ambev received
a favourable judgment at the second administrative level in February 2022, which is still subject to appeal by tax authorities.
With respect to the assessments issued by the State of São Paulo, Ambev received unfavourable judgments at the first
administrative level in May and June 2022. In these cases, Ambev has filed appeals to the second administrative level.
Ambev management estimates the possible losses related to these assessments to be approximately 0.7 billion Brazilian
real (0.1 billion US dollar) as of 31 December 2022.
ICMS-ST Trigger
Over the years, Ambev has received tax assessments to charge supposed ICMS differences considered due when the
price of the products sold by Ambev is above the fixed price table basis established by the relevant states, cases in which
the state tax authorities understand that the calculation basis should be based on a value-added percentage over the
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