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Income Tax | 12 Months Ended
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Dec. 31, 2023
Major components of tax expense (income) [abstract] |
Income Tax | 32. INCOME TAX a. Income tax recognized in profit or loss The major components of income tax expense were as follows:
|  | Year Ended December 31 |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Current tax |  |  |  |  |  |  |  |  |
Current tax expenses recognized for the year |  | $ | 8,490 |  |  | $ | 8,863 |  |  | $ | 8,875 |
Income tax on unappropriated earnings |  |  | 181 |  |  |  | 137 |  |  |  | (31 | )
Income tax adjustments on prior years |  |  | (150 | ) |  |  | (141 | ) |  |  | (128 | )
Others |  |  | 7 |  |  |  | 7 |  |  |  | 4 |
|  |  | 8,528 |  |  |  | 8,866 |  |  |  | 8,720 |
Deferred tax |  |  |  |  |  |  |  |  |
Deferred tax expense recognized for the year |  |  | 489 |  |  |  | 318 |  |  |  | 218 |
Income tax adjustments on prior years |  |  | 3 |  |  |  | 151 |  |  |  | 9 |
|  |  | 492 |  |  |  | 469 |  |  |  | 227 |
Income tax recognized in profit or loss |  | $ | 9,020 |  |  | $ | 9,335 |  |  | $ | 8,947 |
Reconciliation of accounting profit and income tax expense was as follows:
|  | Year Ended December 31 |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Income before income tax |  | $ | 46,067 |  |  | $ | 47,204 |  |  | $ | 47,008 |
Income tax expense calculated at the statutory rate |  | $ | 9,213 |  |  | $ | 9,441 |  |  | $ | 9,401 |
Nondeductible income and expenses in determining taxable income |  |  | 8 |  |  |  | (20 | ) |  |  | 28 |
Tax-exempt income |  |  | (30 | ) |  |  | (3 | ) |  |  | (9 | )
Income tax on unappropriated earnings |  |  | 181 |  |  |  | 137 |  |  |  | (31 | )
Investment credits |  |  | (217 | ) |  |  | (207 | ) |  |  | (209 | )
Effect of different tax rates of group entities operating in other jurisdictions |  |  | (10 | ) |  |  | (31 | ) |  |  | (7 | )
Income tax adjustments on prior years |  |  | (147 | ) |  |  | 10 |  |  |  | (119 | )
Others |  |  | 22 |  |  |  | 8 |  |  |  | (107 | )
Income tax expense recognized in profit or loss |  | $ | 9,020 |  |  | $ | 9,335 |  |  | $ | 8,947 |
The applicable tax rate used by the entities subject to the Income Tax Act of the Republic of China is 20%. Tax rates used by other entities of the Company operating in other jurisdictions are based on the tax laws in those jurisdictions. b. Income tax recognized in other comprehensive income
|  | Year Ended December 31 |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Deferred tax |  |  |  |  |  |  |  |  |
Remeasurement on defined benefit pension plans |  | $ | 78 |  |  | $ | 231 |  |  | $ | 31 |
c. Current tax assets and liabilities
|  | December 31 |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |
Current tax assets |  |  |  |  |  |
Tax refund receivable (included in other current assets - others) |  | $ | 2 |  |  | $ | 4 |
Current tax liabilities |  |  |  |  |  |
Income tax payable |  | $ | 6,999 |  |  | $ | 6,613 |
d. Deferred income tax assets and liabilities The movements of deferred income tax assets and liabilities were as follows: For the year ended December 31, 2021
|  | January 1, 2021 |  |  | Recognized in Profit or Loss |  |  | Recognized in Other Comprehensive Income |  |  | December 31, 2021 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Deferred income tax assets |  |  |  |  |  |  |  |  |  |  |  |
Temporary differences |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit pension plans |  | $ | 1,816 |  |  | $ | 6 |  |  | $ | (78 | ) |  | $ | 1,744 |
Allowance for doubtful receivables over quota |  |  | 365 |  |  |  | (100 | ) |  |  | — |  |  |  | 265 |
Valuation loss on inventory |  |  | 299 |  |  |  | (102 | ) |  |  | — |  |  |  | 197 |
Seniority bonus |  |  | 4 |  |  |  | 1 |  |  |  | — |  |  |  | 5 |
Impairment loss on assets |  |  | 4 |  |  |  | (4 | ) |  |  | — |  |  |  | — |
Estimated warranty liabilities |  |  | 36 |  |  |  | 7 |  |  |  | — |  |  |  | 43 |
Valuation loss on financial assets |  |  | 33 |  |  |  | (33 | ) |  |  | — |  |  |  | — |
Valuation loss on onerous contracts |  |  | 34 |  |  |  | (8 | ) |  |  | — |  |  |  | 26 |
Accrued award credits liabilities |  |  | 18 |  |  |  | (9 | ) |  |  | — |  |  |  | 9 |
Deferred revenue |  |  | 73 |  |  |  | (24 | ) |  |  | — |  |  |  | 49 |
Share of profit or loss of associates and joint ventures accounted for using equity method |  |  | 401 |  |  |  | — |  |  |  | — |  |  |  | 401 |
Unrealized foreign exchange loss, net |  |  | 5 |  |  |  | (3 | ) |  |  | — |  |  |  | 2 |
Others |  |  | 25 |  |  |  | 8 |  |  |  | — |  |  |  | 33 |
|  |  | 3,113 |  |  |  | (261 | ) |  |  | (78 | ) |  |  | 2,774 |
Loss carryforwards |  |  | 20 |  |  |  | (9 | ) |  |  | — |  |  |  | 11 |
|  | $ | 3,133 |  |  | $ | (270 | ) |  | $ | (78 | ) |  | $ | 2,785 |
Deferred income tax liabilities |  |  |  |  |  |  |  |  |  |  |  |
Temporary differences |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit pension plans |  | $ | (1,812 | ) |  | $ | (157 | ) |  | $ | — |  |  | $ | (1,969 | )
Land value incremental tax |  |  | (95 | ) |  |  | — |  |  |  | — |  |  |  | (95 | )
Deferred revenue for award credits |  |  | (30 | ) |  |  | (25 | ) |  |  | — |  |  |  | (55 | )
Intangible assets |  |  | (27 | ) |  |  | 3 |  |  |  | — |  |  |  | (24 | )
Unrealized foreign exchange gain, net |  |  | — |  |  |  | (27 | ) |  |  | — |  |  |  | (27 | )
Others |  |  | (3 | ) |  |  | (16 | ) |  |  | — |  |  |  | (19 | )
|  | $ | (1,967 | ) |  | $ | (222 | ) |  | $ | — |  |  | $ | (2,189 | )
For the year ended December 31, 2022
|  | January 1, 2022 |  |  | Recognized in Profit or Loss |  |  | Recognized in Other Comprehensive Income |  |  | December 31, 2022 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Deferred income tax assets |  |  |  |  |  |  |  |  |  |  |  |
Temporary differences |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit pension plans |  | $ | 1,744 |  |  | $ | 1 |  |  | $ | (231 | ) |  | $ | 1,514 |
Allowance for doubtful receivables over quota |  |  | 265 |  |  |  | (81 | ) |  |  | — |  |  |  | 184 |
Valuation loss on inventory |  |  | 197 |  |  |  | (92 | ) |  |  | — |  |  |  | 105 |
Seniority bonus |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 5 |
Impairment loss on assets |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Estimated warranty liabilities |  |  | 43 |  |  |  | 4 |  |  |  | — |  |  |  | 47 |
Valuation loss on financial assets |  |  | — |  |  |  | 24 |  |  |  | — |  |  |  | 24 |
Valuation loss on onerous contracts |  |  | 26 |  |  |  | (8 | ) |  |  | — |  |  |  | 18 |
Accrued award credits liabilities |  |  | 9 |  |  |  | 3 |  |  |  | — |  |  |  | 12 |
Deferred revenue |  |  | 49 |  |  |  | (19 | ) |  |  | — |  |  |  | 30 |
Share of profit or loss of associates and joint ventures accounted for using equity method |  |  | 401 |  |  |  | (399 | ) |  |  | — |  |  |  | 2 |
Unrealized foreign exchange loss, net |  |  | 2 |  |  |  | 56 |  |  |  | — |  |  |  | 58 |
Others |  |  | 33 |  |  |  | (5 | ) |  |  | — |  |  |  | 28 |
|  |  | 2,774 |  |  |  | (516 | ) |  |  | (231 | ) |  |  | 2,027 |
Loss carryforwards |  |  | 11 |  |  |  | 159 |  |  |  | — |  |  |  | 170 |
|  | $ | 2,785 |  |  | $ | (357 | ) |  | $ | (231 | ) |  | $ | 2,197 |
Deferred income tax liabilities |  |  |  |  |  |  |  |  |  |  |  |
Temporary differences |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit pension plans |  | $ | (1,969 | ) |  | $ | (145 | ) |  | $ | — |  |  | $ | (2,114 | )
Land value incremental tax |  |  | (95 | ) |  |  | — |  |  |  | — |  |  |  | (95 | )
Deferred revenue for award credits |  |  | (55 | ) |  |  | (15 | ) |  |  | — |  |  |  | (70 | )
Intangible assets |  |  | (24 | ) |  |  | 4 |  |  |  | — |  |  |  | (20 | )
Unrealized foreign exchange gain, net |  |  | (27 | ) |  |  | 26 |  |  |  | — |  |  |  | (1 | )
Others |  |  | (19 | ) |  |  | 18 |  |  |  | — |  |  |  | (1 | )
|  | $ | (2,189 | ) |  | $ | (112 | ) |  | $ | — |  |  | $ | (2,301 | )
For the year ended December 31, 2023
|  | January 1, 2023 |  |  | Recognized in Profit or Loss |  |  | Recognized in Other Comprehensive Income |  |  | December 31, 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Deferred income tax assets |  |  |  |  |  |  |  |  |  |  |  |
Temporary differences |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit pension plans |  | $ | 1,514 |  |  | $ | 1 |  |  | $ | (31 | ) |  | $ | 1,484 |
Allowance for doubtful receivables over quota |  |  | 184 |  |  |  | (41 | ) |  |  | — |  |  |  | 143 |
Valuation loss on inventory |  |  | 105 |  |  |  | (29 | ) |  |  | — |  |  |  | 76 |
Seniority bonus |  |  | 5 |  |  |  | 64 |  |  |  | — |  |  |  | 69 |
Impairment loss on assets |  |  | — |  |  |  | 60 |  |  |  | — |  |  |  | 60 |
Estimated warranty liabilities |  |  | 47 |  |  |  | 1 |  |  |  | — |  |  |  | 48 |
Valuation loss on financial assets |  |  | 24 |  |  |  | 21 |  |  |  | — |  |  |  | 45 |
Valuation loss on onerous contracts |  |  | 18 |  |  |  | 19 |  |  |  | — |  |  |  | 37 |
Accrued award credits liabilities |  |  | 12 |  |  |  | 5 |  |  |  | — |  |  |  | 17 |
Deferred revenue |  |  | 30 |  |  |  | (15 | ) |  |  | — |  |  |  | 15 |
Share of profit or loss of associates and joint ventures accounted for using equity method |  |  | 2 |  |  |  | 6 |  |  |  | — |  |  |  | 8 |
Unrealized foreign exchange loss, net |  |  | 58 |  |  |  | (55 | ) |  |  | — |  |  |  | 3 |
Others |  |  | 28 |  |  |  | (3 | ) |  |  | — |  |  |  | 25 |
|  |  | 2,027 |  |  |  | 34 |  |  |  | (31 | ) |  |  | 2,030 |
Loss carryforwards |  |  | 170 |  |  |  | (101 | ) |  |  | — |  |  |  | 69 |
|  | $ | 2,197 |  |  | $ | (67 | ) |  | $ | (31 | ) |  | $ | 2,099 |
Deferred income tax liabilities |  |  |  |  |  |  |  |  |  |  |  |
Temporary differences |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit pension plans |  | $ | (2,114 | ) |  | $ | (146 | ) |  | $ | — |  |  | $ | (2,260 | )
Land value incremental tax |  |  | (95 | ) |  |  | — |  |  |  | — |  |  |  | (95 | )
Deferred revenue for award credits |  |  | (70 | ) |  |  | 4 |  |  |  | — |  |  |  | (66 | )
Intangible assets |  |  | (20 | ) |  |  | 2 |  |  |  | — |  |  |  | (18 | )
Unrealized foreign exchange gain, net |  |  | (1 | ) |  |  | (11 | ) |  |  |  |  |  | (12 | )
Others |  |  | (1 | ) |  |  | (9 | ) |  |  | — |  |  |  | (10 | )
|  | $ | (2,301 | ) |  | $ | (160 | ) |  | $ | — |  |  | $ | (2,461 | )
e. Items for which no deferred income tax assets have been recognized
|  | December 31 |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |
Loss carryforwards |  |  |  |  |  |
Expire in 2023 |  | $ | — |  |  | $ | — |
Expire in 2024 |  |  | 1 |  |  |  | 1 |
Expire in 2025 |  |  | 15 |  |  |  | 15 |
Expire in 2026 |  |  | 8 |  |  |  | 8 |
Expire in 2027 |  |  | 3 |  |  |  | 3 |
Expire in 2028 |  |  | 1 |  |  |  | 1 |
Expire in 2029 |  |  | 1 |  |  |  | 1 |
Expire in 2030 |  |  | — |  |  |  | — |
Expire in 2031 |  |  | — |  |  |  | — |
Expire in 2032 |  |  | — |  |  |  | 5 |
Expire in 2033 |  |  | — |  |  |  | 13 |
|  | $ | 29 |  |  | $ | 47 |
Investment credits - research and development expenditures |  |  |  |  |  |
Expire in 2025 |  | $ | — |  |  | $ | 8 |
Deductible temporary differences |  | $ | 13 |  |  | $ | 10 |
f. Information about unused investment credits and loss carryforwards As of December 31, 2023, information about unused investment credits - research and development expenditures was as follows:
Remaining Creditable Amount |  |  | Expiry Year
NT$ (In Millions) |  |  |
$ | 8 |  |  | 2025
As of December 31, 2023, information about unused loss carryforwards was as follows:
Remaining Creditable Amount |  |  | Expiry Year
NT$ (In Millions) |  |  |
$ | 1 |  |  | 2024
| 18 |  |  | 2025
| 10 |  |  | 2026
| 3 |  |  | 2027
| 1 |  |  | 2028
| 2 |  |  | 2029
| 1 |  |  | 2030
| 1 |  |  | 2031
| 63 |  |  | 2032
| 16 |  |  | 2033
$ | 116 |  |  |
g. Income tax examinations Income tax returns of Chunghwa have been examined by the tax authorities through 2021, except for 2020. Income tax returns of CHYP, CHSI, CHST, SENAO, ISPOT, Youth, Youyi, Aval, Wiin, SENYOUNG, Senaolife, CHI, CHPT, CHIEF, Unigate, SFD, SHE, CLPT, CHTSC, LED, HHI, IISI and UTC have been examined by the tax authorities through 2021. h. Pillar Two Model Rules The application of the Pillar Two rules does not have a material impact on the Company’s consolidated financial statements. The Company will continue to review the possible impact on the Company’s future financial performance.

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