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Income Tax (Tables)

12 Months Ended

Dec. 31, 2018

The major components of income tax expense were as follows:

	Year Ended December 31
	2016			2017			2018
	NT$			NT$			NT$
	(In Millions)
Current tax
Current tax expenses recognized for the year	$	6,736		$	7,996		$	8,271
Income tax on unappropriated earnings		(346	)		(60	)		(2,070	)
Income tax adjustments on prior years		(22	)		(2	)		7
Others		15			10			8
		6,383			7,944			6,216
Deferred tax
Deferred tax expense recognized for the year		1,404			(101	)		208
Income tax adjustments on prior years		—			6			19
Change in tax rate		—			—			(38	)
		1,404			(95	)		189
Income tax expense recognized in profit or loss	$	7,787		$	7,849		$	6,405

Reconciliation of accounting profit and income tax expense was as follows:

	Year Ended December 31
	2016			2017			2018
	NT$			NT$			NT$
	(In Millions)
Income before income tax	$	49,413		$	48,009		$	44,986
Income tax expense calculated at the statutory rate (17% in 2016 and 2017, and 20% in 2018)	$	8,400		$	8,162		$	8,997
Nondeductible income and expenses in determining taxable income		5			34			227
Unrecognized deductible temporary differences		(9	)		(1	)		1
Unrecognized loss carryforwards		12			10			21
Tax-exempt income		(25	)		(87	)		(580	)
Additional income tax under Alternative Minimum Tax Act		—			—			46
Income tax on unappropriated earnings		(346	)		(60	)		(2,070	)
Investment credits		(234	)		(212	)		(204	)
Change in tax rate		—			—			(38	)
Effect of different tax rates of group entities operating in other jurisdictions		(8	)		(2	)		(15	)
Income tax adjustments on prior years		(22	)		4			26
Others		14			1			(6	)
Income tax expense recognized in profit or loss	$	7,787		$	7,849		$	6,405

Income tax benefit recognized in other comprehensive income

	Year Ended December 31
	2016			2017			2018
	NT$			NT$			NT$
				(In Millions)
Deferred tax
Remeasurement on defined benefit plan	$	(347	)	$	(344	)	$	(243	)
Change in tax rate		—			—			(207	)
Unrealized gain or loss on available-for-sale financial assets		(2	)		(3	)		—
Total income tax benefit recognized in other comprehensive income	$	(349	)	$	(347	)	$	(450	)

Current tax assets and liabilities

	December 31
	2017		2018
	NT$		NT$
	(In Millions)
Current tax assets
Tax refund receivable (included in other current assets - other)	$	2	$	—
Current tax liabilities
Income tax payable	$	8,674	$	6,221

Deferred income tax assets and liabilities

The movements of deferred income tax assets and liabilities were as follows:

For the year ended December 31, 2016

	January 1, 2016		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2016
	NT$		NT$			NT$		NT$
	(In Millions)
Deferred Income Tax Assets
Temporary differences
Defined benefit obligation	$	1,206	$	(179	)	$	347	$	1,374
Allowance for doubtful receivables over quota		169		61			—		230
Share of profits of associates and joint ventures accounted for using equity method		325		5			—		330
Deferred revenue		136		(19	)		—		117
Impairment loss on property, plant and equipment		44		78			—		122
Valuation loss on inventory		33		(13	)		—		20
Estimated warranty liabilities		18		1			—		19
Accrued award credits liabilities		22		(2	)		—		20
Property, plant and equipment		2		—			—		2
Unrealized foreign exchange loss, net		18		(18	)		—		—
Others		40		(6	)		—		34
		2,013		(92	)		347		2,268
Loss carryforwards		48		6			—		54
	$	2,061	$	(86	)	$	347	$	2,322

	January 1, 2016			Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2016
	NT$			NT$			NT$		NT$
	(In Millions)
Deferred Income Tax Liabilities
Temporary differences
Defined benefit obligation	$	(1	)	$	(1,268	)	$	—	$	(1,269	)
Land value incremental tax		(95	)		—			—		(95	)
Intangible assets		(43	)		3			—		(40	)
Deferred revenue for award credits		(2	)		(44	)		—		(46	)
Unrealized foreign exchange gain, net		(1	)		(9	)		—		(10	)
Valuation gain or loss on financial instruments, net		(5	)		—			2		(3	)
Others		(1	)		—			—		(1	)
	$	(148	)	$	(1,318	)	$	2	$	(1,464	)

For the year ended December 31, 2017

	January 1, 2017		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2017
	NT$		NT$			NT$		NT$
	(In Millions)
Deferred Income Tax Assets
Temporary differences
Defined benefit obligation	$	1,374	$	5		$	344	$	1,723
Allowance for doubtful receivables over quota		230		59			—		289
Share of profits of associates and joint ventures accounted for using equity method		330		1			—		331
Deferred revenue		117		(11	)		—		106
Impairment loss on property, plant and equipment		122		(10	)		—		112
Valuation loss on inventory		20		3			—		23
Estimated warranty liabilities		19		3			—		22
Accrued award credits liabilities		20		(5	)		—		15
Trade-in right		—		15			—		15
Property, plant and equipment		2		—			—		2
Unrealized foreign exchange loss, net		—		17			—		17
Others		34		(5	)		—		29
		2,268		72			344		2,684
Loss carryforwards		54		(8	)		—		46
	$	2,322	$	64		$	344	$	2,730

	January 1, 2017			Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2017
	NT$			NT$			NT$		NT$
	(In Millions)
Deferred Income Tax Liabilities
Temporary differences
Defined benefit obligation	$	(1,269	)	$	4		$	—	$	(1,265	)
Land value incremental tax		(95	)		—			—		(95	)
Intangible assets		(40	)		1			—		(39	)
Deferred revenue for award credits		(46	)		17			—		(29	)
Unrealized foreign exchange gain or loss, net		(10	)		10			—		—
Valuation gain or loss on financial instruments, net		(3	)		(1	)		3		(1	)
Others		(1	)		—			—		(1	)
	$	(1,464	)	$	31		$	3	$	(1,430	)

For the year ended December 31, 2018

	January 1, 2018		Effect of Retrospective Application of IFRS 9 (Note 5)		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2018
	NT$		NT$		NT$			NT$		NT$
	(In Millions)
Deferred Income Tax Assets
Temporary differences
Defined benefit obligation	$	1,723	$	—	$	134		$	450	$	2,307
Allowance for doubtful receivables over quota		289		—		146			—		435
Share of profits of associates and joint ventures accounted for using equity method		331		—		58			—		389
Deferred revenue		106		—		5			—		111
Impairment loss on property, plant and equipment		112		—		(19	)		—		93
Valuation loss on inventory		23		—		65			—		88
Estimated warranty liabilities		22		—		4			—		26
Accrued award credits liabilities		15		—		(1	)		—		14
Trade-in right		15		—		(5	)		—		10
Property, plant and equipment		2		—		—			—		2
Unrealized foreign exchange loss, net		17		—		(16	)		—		1
Others		29		—		8			—		37
		2,684		—		379			450		3,513
Loss carryforwards		46		—		(5	)		—		41
	$	2,730	$	—	$	374		$	450	$	3,554

	January 1, 2018			Effect of Retrospective Application of IFRS 9 (Note 5)		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2018
	NT$			NT$		NT$			NT$		NT$
	(In Millions)
Deferred Income Tax Liabilities
Temporary differences
Defined benefit obligation	$	(1,265	)	$	—	$	(567	)	$	—	$	(1,832	)
Land value incremental tax		(95	)		—		—			—		(95	)
Intangible assets		(39	)		—		7			—		(32	)
Deferred revenue foraward credits		(29	)		—		(2	)		—		(31	)
Unrealized foreign exchange gain, net		—			—		(1	)		—		(1	)
Valuation gain or loss on financial instruments, net		(1	)		1		—			—		—
Others		(1	)		—		—			—		(1	)
	$	(1,430	)	$	1	$	(563	)	$	—	$	(1,992	)

Items for which no deferred income tax assets have been recognized

	December 31
	2017		2018
	NT$		NT$
	(In Millions)
Loss carryforwards
Expire in 2019	$	138	$	136
Expire in 2020		42		41
Expire in 2021		9		12
Expire in 2022		11		10
Expire in 2023		—		9
Expire in 2024		—		2
Expire in 2025		13		15
Expire in 2026		—		8
Expire in 2027		2		3
Expire in 2028		—		1
	$	215	$	237
Deductible temporary differences	$	2	$	1

As of December 31, 2018, unused loss carryforwards was as follows:

Remaining Creditable Amount		Expiry Year
NT$ (In Millions)
$	136	2019
	41	2020
	22	2021
	11	2022
	9	2023
	2	2024
	33	2025
	12	2026
	3	2027
	8	2028
$	277