The effective tax rate may experience significant volatility from year to year, since it depends on adjustments to the nominal tax rate that take place each year, in terms of permanent and/or temporary differences (e.g. capital gains, goodwill, equity), which contributes to reducing transparency and regulatory predictability with regard to the cost of capital rate, and makes it too exposed to financial strategies or to the company’s business.
In addition, over the long term, the effective tax rate will tend towards the nominal tax rate, since the adjustments tend to offset each other.
The tax rate to be considered for the purpose provided for the determination of the cost of capital is the nominal rate, as in the previous determination, given that: (i) this avoids the frequent changes resulting from the effective tax rate, arising mainly from annual corrections applied for the purpose of the determination of the tax base, as well as from variations in deferred taxes; (ii) it is less complex to calculate the nominal tax rate than the effective tax rate; (iii) it provides greater regulatory predictability; and (iv) it consists of a fixed figure which is external to the company and which may be clearly observed.
Methodology to be applied from 2012
In the light of points listed above, as in the determination of 2010, the tax rate to be considered, for the purpose of the calculation of the cost of capital rate, corresponds to the nominal tax rate.
