Company: AKO-B
Filing Date: 2025-03-26
Form Type: 20-F
Source: 0001410578-25-000473
Chunk: 22

Company: ANDINA BOTTLING CO INC
Filing Date: 2025-03-26
Form: 20-F
Item: Item 3
Chunk 22
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 Throughout this period, the Brazilian government has implemented various economic plans and exchange rate policies, including sudden devaluations, periodic mini devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange market and floating exchange rate systems. Although long-term devaluation of the real is generally related to the rate of inflation in Brazil, the devaluation of the real over shorter periods has resulted in significant fluctuations in the exchange rate between the Brazilian currency, the U.S. dollar and other currencies. The Brazilian real appreciated 7% in 2022, appreciated 7% in 2023 and depreciated 28% in 2024 compared to the closing exchange rate as of the end of the prior period for the U.S. dollar in nominal terms. 
A significant part of the raw materials we use in Brazil are priced in U.S. dollars, so a depreciation of the Brazilian real against the U.S. dollar has a significant adverse effect in our costs and margins.
Any depreciation of the real against the U.S. dollar could create additional inflationary pressure, which might result in the Brazilian government adopting restrictive policies to combat inflation. This could lead to increases in interest rates, which might negatively affect the Brazilian economy as a whole, as well as our results of operations, in addition to restricting our access to international financial markets. It also reduces the U.S. dollar value of our revenues. On the other hand, future appreciation of the real against the U.S. dollar might result in the deterioration of Brazil’s current and capital accounts, as well as a weakening of Brazilian GDP growth derived from exports. We cannot assure you that the real will not again fluctuate significantly against the U.S. dollar in the future and, as a result, have an adverse effect on our business, results of operations and financial condition.
Changes in tax laws may increase our tax burden and reduce tax incentives and, as a result, negatively affect our profitability.
The Brazilian government regularly implements changes to tax regimes that may increase our and our customers’ tax burdens. These changes include modifications in the tax rates and, on occasion, enactment of temporary taxes, the proceeds of which are earmarked for designated governmental purposes. In late 2023, the Brazilian government approved a tax reform on consumption whose prime objective is to simplify the taxes on goods and services, thus reducing distortions and enhancing transparency for businesses operating in Brazil. This tax reform will be highly relevant because Brazil’s current tax system is considered one of the most complex in the world, with