2.0.0.10 false Note 3 - Income Taxes 00902 - Disclosure - Note 3 - Income Taxes true false false false 1 usd $ false false Dollars Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 2 Notes to Financial Statements [Abstract] 0 pbra_NotesToFinancialStatementsAbstract pbra false na duration string No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false No definition available. false 3 Note 3 - Income Taxes 1 us-gaap_IncomeTaxDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false false false false 1 false false false false 0 0 <div style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%"> 3.   Income Taxes Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal income tax. The statutory enacted tax rates for income tax and social contribution have been 25% and 9%, respectively for the years ended December 31, 2009, 2008 and 2007. The Companys taxable income is substantially generated in Brazil and therefore subject to the Brazilian statutory tax rate. The following table reconciles the tax calculated based upon the Brazilian statutory tax rate of 34% to the income tax expense recorded in these consolidated statements of income. <div align="left"> <table style="FONT-SIZE: 9pt; WIDTH: 100%; FONT-FAMILY: '''''''''''''''''Times New Roman'''''''''''''''''" cellspacing="0" border="0"> <tr> <td></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center" colspan="5">Year ended December 31, </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2009 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2008 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2007 </td> </tr> <tr valign="bottom"> <td align="left">Income before income taxes and minority interest: </td> <td> </td> <td align="left"> </td> <td> </td> <td align="left"> </td> <td> </td> <td align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Brazil </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">20,770</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">28,080</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">19,431</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">International </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">1,291</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(1,088)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(132)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">22,061</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">26,992</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">19,299</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td align="left">Tax expense at statutory rate- (34%) </td> <td> </td> <td align="right">(7,501)</td> <td> </td> <td align="right">(9,177)</td> <td> </td> <td align="right">(6,562)</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Adjustments to derive effective tax rate: </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Non-deductible postretirement and health-benefits </td> <td> </td> <td align="right">(148)</td> <td> </td> <td align="right">(254)</td> <td> </td> <td align="right">(315)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Change in valuation allowance </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(98)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,004)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(575)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Foreign income subject to different tax rates </td> <td> </td> <td align="right">556</td> <td> </td> <td align="right">25</td> <td> </td> <td align="right">(199)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Tax incentive (1) </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">167</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">219</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">712</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Equity </td> <td> </td> <td align="right">114</td> <td> </td> <td align="right">(7)</td> <td> </td> <td align="right">82</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 3px; BACKGROUND-COLOR: #cceeff" align="left">Tax benefit on interest on shareholdersequity (see Note 17 (e)) </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">1,331</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">995</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">998</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Technological Innovations </td> <td> </td> <td align="right">134</td> <td> </td> <td align="right">162</td> <td> </td> <td align="right">81</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Goodwill Impairment (see Note 18 (a)) </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">-</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(76)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">-</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Other </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">207</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(142)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(110)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Income tax expense per consolidated statement of income </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">(5,238)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">(9,259)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">(5,888)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr> <td align="left" colspan="7"> (1) On May 10, 2007, the Brazilian Federal Revenue Office recognized Petrobras right to deduct certain tax incentives from income tax payable, covering the tax years of 2006 until 2015. During the year ended December 31, 2009, Petrobras recognized a tax benefit in the amount of US$167 (US$219 on December 31, 2008 and US$712 on December 31, 2007) primarily related to these incentives in the Northeast, within the region covered by the Northeast Development Agency (ADENE), granting a 75% reduction in income tax payable, calculated on the profits of the exploration of the incentive activities and these have been accounted for under the flow through method.</td> </tr> </table> </div>   </div> <div style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%"> The following table shows a breakdown between domestic and international income tax benefit (expense) attributable to income from continuing operations: <div align="left"> <table style="FONT-SIZE: 9pt; WIDTH: 100%; FONT-FAMILY: '''''''''''''Times New Roman'''''''''''''" cellspacing="0" border="0"> <tr> <td></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center" colspan="5">Year ended December 31, </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2009 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2008 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2007 </td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Brazil: </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Current </td> <td> </td> <td align="right">(3,987)</td> <td> </td> <td align="right">(6,583)</td> <td> </td> <td align="right">(4,473)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Deferred </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(932)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(2,463)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(991)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(4,919)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(9,046)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(5,464)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">International: </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Current </td> <td> </td> <td align="right">(391)</td> <td> </td> <td align="right">(321)</td> <td> </td> <td align="right">(353)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Deferred </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">72</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">108</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(71)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(319)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(213)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(424)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Income tax expense </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 3px double; BACKGROUND-COLOR: #cceeff" align="right">(5,238)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 3px double; BACKGROUND-COLOR: #cceeff" align="right">(9,259)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 3px double; BACKGROUND-COLOR: #cceeff" align="right">(5,888)</td> </tr> </table> </div>   All the deferred tax assets and liabilities recorded are principally related to Brazil and there are no significant deferred tax assets and liabilities from international locations. There is no netting of deferred taxes between jurisdictions. </div> <div style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%"> The major components of the deferred income tax accounts in the consolidated balance sheet are as follows: <div align="left"> <table style="FONT-SIZE: 9pt; WIDTH: 100%; FONT-FAMILY: ''''''''''''Times New Roman''''''''''''" cellspacing="0" border="0"> <tr> <td></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center" colspan="3">As of December 31, </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2009 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2008 </td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Current assets </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">669</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">505</td> </tr> <tr valign="bottom"> <td align="left">Valuation allowance </td> <td> </td> <td align="right">(8)</td> <td> </td> <td align="right">(5)</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Current liabilities </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(15)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(8)</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Net current deferred tax assets </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 3px double; BACKGROUND-COLOR: #cceeff" align="right">646</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 3px double; BACKGROUND-COLOR: #cceeff" align="right">492</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Non-current assets </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Employees postretirement benefits, net of Accumulated postretirements benefit reserves adjustments </td> <td> </td> <td align="right">879</td> <td> </td> <td align="right">116</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px; BACKGROUND-COLOR: #cceeff" align="left">Tax loss carryforwards </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">2,194</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">1,944</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Other temporary differences </td> <td> </td> <td align="right">1,091</td> <td> </td> <td align="right">742</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px; BACKGROUND-COLOR: #cceeff" align="left">Valuation allowance </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(1,691)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(1,609)</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">2,473</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">1,193</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Non-current liabilities </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Capitalized exploration and development costs </td> <td> </td> <td align="right">(8,912)</td> <td> </td> <td align="right">(5,251)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Property, plant and equipment </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,609)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,024)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px" align="left">Exchange variation </td> <td> </td> <td align="right">(995)</td> <td> </td> <td align="right">(1,226)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 2px; BACKGROUND-COLOR: #cceeff" align="left">Other temporary differences, not significant individually </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(526)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(649)</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(12,042)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(8,150)</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Net non-current deferred tax liabilities </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(9,569)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(6,957)</td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Non-current deferred tax assets </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">275</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">123</td> </tr> <tr valign="bottom"> <td align="left">Non-current deferred tax liabilities </td> <td> </td> <td align="right">(9,844)</td> <td> </td> <td align="right">(7,080)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="5"> </td> </tr> <tr valign="bottom"> <td align="left">Net deferred tax liability </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">(8,923)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">(6,465)</td> </tr> </table> </div>   </div> <div style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%"> The Company has domestic accumulated tax loss carryforwards amounting to US$1,434 as of December 31, 2009, which are available to offset future taxable income, limited to 30% of taxable income in any individual year. These tax loss carryforwards can be carried forward indefinitely in Brazil. Management believes that for the tax benefits where valuation allowance is more likely than not that it will realize those tax benefits within ten years at the maximum. The Company has foreign accumulated tax loss carryforwards amounting to US$5,070 as of December 31, 2009. Tax loss carryfowards exists in many international jurisdictions. Whereas some of these tax loss carryfowards do not have expiration date, others expire at various times from 2010 to 2029. Valuation allowance has been established for certain credit loss carryfowards that reduce deferred tax to an amount that will, more likely than not, be realized. Annually management evaluates the realizability of its deferred tax assets taking into consideration, among other elements, the level of historical taxable income, the projected future taxable income, tax-planning strategies, expiration dates of the tax loss carryforwards, and scheduled reversal of the existing temporary differences. The amount of the deferred tax asset considered realizable could, however, be reduced if estimates of future taxable income are reduced. The following presents the net change in the valuation allowance for the years ended December 31, 2009, 2008 and 2007: <div align="left"> <table style="FONT-SIZE: 9pt; WIDTH: 100%; FONT-FAMILY: ''''''''''''''''Times New Roman''''''''''''''''" cellspacing="0" border="0"> <tr> <td></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td align="center" colspan="5">Year ended</td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center" colspan="5">December 31,</td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2009 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2008 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center">2007 </td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td align="left">Balance at January 1, </td> <td> </td> <td align="right">(1,614)</td> <td> </td> <td align="right">(667)</td> <td> </td> <td align="right">(453)</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Additions </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(185)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,071)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(587)</td> </tr> <tr valign="bottom"> <td align="left">Reductions allocated to income tax expense </td> <td> </td> <td align="right">88</td> <td> </td> <td align="right">67</td> <td> </td> <td align="right">12</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Reductions allocated to goodwill </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">-</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">-</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">168</td> </tr> <tr valign="bottom"> <td align="left">Reductions due to expiration </td> <td> </td> <td align="right">-</td> <td> </td> <td align="right">-</td> <td> </td> <td align="right">209</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Cumulative translation adjustments </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">12</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">57</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(16)</td> </tr> <tr> <td colspan="7"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Balance at December 31, </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right"></td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="left"> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(1,699)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(1,614)</td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">(667)</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="7"> </td> </tr> <tr valign="bottom"> <td align="left">Current valuation allowance </td> <td> </td> <td align="right">(8)</td> <td> </td> <td align="right">(5)</td> <td> </td> <td align="right">-</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Long term valuation allowance </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,691)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(1,609)</td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(667)</td> </tr> </table> </div>   Valuation allowance additions of US$185 in 2009 and US$1,071 in 2008, primarily related to tax loss carryforwards from foreign operations and domestic thermoelectric power plants for which no tax benefit is expected to be realized in the foreseeable future. </div> <div style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%"> The reduction in valuation allowance in 2007 was primarily related to Petrobras Argentina, of which a tax benefit of US$168 was allocated to reduce goodwill for the deferred asset that was not previously recognized at the acquisition date. The majority of the remaining amount was related to the reduction in both gross deferred tax asset and related valuation allowance due to the expiration of the unutilized tax loss carryforwards in Petrobras Argentina. Subsequent recognition of tax benefits related to the valuation allowance for deferred tax assets as of December 31, 2008, will be recorded in the consolidated statement of income. The Company has not recognized a deferred tax liability of approximately US$122 for the undistributed earnings of its foreign operations that arose in 2009 and prior years as the Company considers these earnings to be indefinitely reinvested (US$199 in 2008). A deferred tax liability will be recognized when the Company no longer demonstrates that it plans to indefinitely reinvest the undistributed earnings. As of December 31, 2009, the undistributed earnings of these subsidiaries were approximately US$813 (US$1,329 as of December 31, 2008). The Company has no unrecognized tax benefits relating to uncertain tax positions and accrued penalties and interest as of January 1, 2007, 2008 and 2009 and for the years ended December 31, 2007, 2008 and 2009. In addition, the Company does not expect that the amount of unrecognized tax benefits will increase significantly within the next 12 months. The Company and its subsidiaries file tax returns in Brazilian jurisdiction and in many foreign jurisdictions. The Brazilian and Argentinean income tax returns remain subject to examination by the respective tax authorities for the years beginning in 2002. </div> 3.   Income Taxes Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal income tax. The false false false Description containing the entire income tax disclosure. Examples include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 false false 1 2 false UnKnown UnKnown UnKnown false true