• 
  • Consolidated Balance Sheets
  • Consolidated Statements of income Yeares Ended
  • Consolidated Statements of Comprehensive Income Years Ended
  • Consolidated Statements of Shareholders' Equity
  • Consolidated Statements of Cash Flow Years Ended
  • Notes To the Consolidated Financial Statements
    • 1. Operations
    • 2. Presentation of the Financial Statements and Accounting Practices
    • 3. Critical Accounting Estimates
    • 4. Accounting Pronouncements not yet Adopted
    • 5. First-time Adoption of IFRS
    • 6. Financial Instruments
    • 7. Cash and Cash Equivalents
    • 8. Financial Assets
    • 9. Trade Accounts Receivable, Net
    • 10. Customer and Commercial Financing
    • 11. Collateralized Accounts Receivable and Recourse and Non Recourse Debt
    • 12. Inventories
    • 13. Other Assets
    • 14. Guarantee Deposits
    • 15. Related Party Transactions
    • 16. Property, Plant and Equipment
    • 17. Intangible Assets
    • 18. Financial Liabilities by Category
    • 19. Loans and Financing
    • 20. Trade Accounts Payable
    • 21. Other Payables
    • 22. Contribution from Suppliers
    • 23. Advances from Customers
    • 24. Axes and Payroll Charges Payable and Income Tax Social Contribution
    • 25. Other Provisions
    • 26. Provisions for Contingencies
    • 27. Post-retirement Benefits
    • 28. Shareholders' Equity
    • 29. Stock Compensation
    • 30. Earnings Per Share
    • 31. Employee Profit Sharing-plan
    • 32. Other Operating (expense) Income, Net
    • 33. Revenue and (expenses) by Nature
    • 34. Financial Income (expense)
    • 35. Foreign Exchange Gains (losses), Net
    • 36. Income Taxesincome Taxes
    • 37. Impairment Test
    • 38. Financial Guarantees
    • 39. Financial Instruments
    • 40. Responsibilities and Commitments
    • 41. Insurance (unaudited)
    • 42. Additional Information of Cash Flow
    • 43. Segment Information
    • 44. Events After the Balance Sheet Date
  • Proposal to the Board of Directors
  • ANNUAL REPORT

Notes to the Consolidated Financial Statements
In millions of U.S. dollars, unless otherwise stated

24. AXES AND PAYROLL CHARGES PAYABLE AND INCOME TAX SOCIAL CONTRIBUTION

	12.31.2010	12.31.2009	01.01.2009
Income tax and social contribution	10.0	13.6	5.8
Social contribution on net income (i)	308.5	280.1	211.3
INSS (social security contribution) (ii)	125.2	109.9	81.5
PIS e COFINS (iii)	29.4	48.5	57.8
Refinanced INSS (social security contribution on rural worker's compensation)	19.6	11.5	14.9
IRRF (Income tax withheld at source)	27.7	26.1	12.4
FGTS (Government Employee Severance Indemnity Fund)	7.4	6.2	5.5
Other	15.0	9.6	17.7
	542.8	505.5	406.9
Less – current portion	89.5	78.5	63.3
Long – term portion	453.3	427.0	343.6

The Company is challenging, through both administrative and legal proceedings, the constitutionality of the institution, the basis for calculation and expansion thereof, as well as the increases in the rates of certain taxes, social contributions and charges, with the aim to ensure non collectability or the recovery of amounts paid in previous years. By means of administrative and legal proceedings, the Company has obtained injunctions and similar measures to suspend collection or offset payment of taxes and social contributions and charges. Provisions have been recorded for the amount of taxes not collected based on preliminary legal decisions, and updated based on changes in the SELIC interest rate until a final and definitive decision is obtained on the main following issues:

(i) The Company is claiming constitutional immunity from the social contribution tax on exports. The lawsuit in relation to social contribution on exports is in the Federal Supreme Court, awaiting judgment of an Extraordinary Appeal, in which a suspensive effect was awarded in the Company's favor. From the amount involved of US$300.2 in 2010, the Company has court-mated escrow deposits totaling US$103.5 (Note 13).

In relation to the IPI credits, the Company agreed to the financing terms introduced by Provisional Measure 470/09. The requirements for obtaining the financing were fulfilled within the legal timeframe, that is, by November 30, 2009.

(ii) This refers to the increase in the work-related accident insurance (SAT) rate. The Company is challenging the legality and absence of technical criteria for such rates since 1995, the liability for which is suspended due to a lower court decision in a civil suit. The amount involved in this case is US$106.3 at December 31, 2010, parent company and consolidated.

On February 18, 2009, the Company filed a suit contesting the payment of social security on dismissal notices paid. As a result of a lower court injunction in favor of the Company, the amounts relating to notices to be paid were excluded from the calculation base for the employer's social security contribution and a provision was recorded, pending a definitive successful outcome of the court case. The case is awaiting filing with the Federal Regional Court, 3rd Region, for analysis of the voluntary appeal. The amount involved in this case at December 31, 2010 is US$6.9.

(iii) Refer to contributions to the PIS/PASEP fund (Social Integration Program/Public Servant Fund) which the Company is contesting for certain periods. The 3rd District Federal Regional Court handed down a final decision recognizing the material rights, and the Company is awaiting a decision in the Higher Court of Justice to establish if the prescriptive period has expired for part of the credit.

As a result of enrollment in the financing scheme introduced by Provisional Measure 470/09 and Law 11.941/09, in relation to the taxes mentioned in items (i) and (iii) above, provisions for charges of US$20.0 were reversed in 2009, US$13.9 in the item financial expense and US$6.1 in the item operating expense. The Company continues to dispute criteria for application of the benefits of the financing in the scope of the lawsuits.

Additionally, in accordance with Provisional Measure 470/09, the subsidiary ELEB settled tax debts with deferred income tax credits on tax losses of US$5.2.

In respect of the above questions, the other provisions will be maintained until the final unappealable decision.

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