Income Tax

12 Months Ended

Dec. 31, 2024

Major components of tax expense (income) [abstract]

33.

INCOME TAX

Income tax recognized in profit or loss

The major components of income tax expense were as follows:


	Year Ended December 31
	2022			2023			2024
	NT$			NT$			NT$
	(In Millions)
Current tax
Current tax expenses recognized for the year	$	8,863		$	8,875		$	9,199
Income tax on unappropriated earnings		137			(31	)		122
Income tax adjustments on prior years		(141	)		(128	)		(176	)
Others		7			4			4
		8,866			8,720			9,149
Deferred tax
Deferred tax expense recognized for the year		318			218			176
Income tax adjustments on prior years		151			9			8
		469			227			184
Income tax recognized in profit or loss	$	9,335		$	8,947		$	9,333

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


	Year Ended December 31
	2022			2023			2024
	NT$			NT$			NT$
	(In Millions)
Income before income tax	$	47,204		$	47,008		$	47,841
Income tax expense calculated at the statutory rate	$	9,441		$	9,401		$	9,568
Nondeductible income and expenses in determining taxable income		(20	)		28			25
Tax-exempt income		(3	)		(9	)		(29	)
Income tax on unappropriated earnings		137			(31	)		122
Investment credits		(207	)		(209	)		(218	)
Effect of different tax rates of group entities operating in other jurisdictions		(31	)		(7	)		10
Income tax adjustments on prior years		10			(119	)		(168	)
Others		8			(107	)		23
Income tax expense recognized in profit or loss	$	9,335		$	8,947		$	9,333

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.

Income tax recognized in other comprehensive income


	Year Ended December 31
	2022		2023		2024
	NT$		NT$		NT$
	(In Millions)
Deferred tax
Remeasurement on defined benefit pension plans	$	231	$	31	$	451

Current tax assets and liabilities


	December 31
	2023		2024
	NT$		NT$
	(In Millions)
Current tax assets
Tax refund receivable (included in other current assets - others)	$	4	$	5
Current tax liabilities
Income tax payable	$	6,613	$	6,822

Deferred income tax assets and liabilities

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

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
Valuation loss on financial assets		—			24			—			24
Impairment loss on assets		—			—			—			—
Estimated warranty liabilities		43			4			—			47
Valuation loss on onerous contracts		26			(8	)		—			18
Share of profit or loss of associates and joint ventures accounted for using equity method		401			(399	)		—			2
Accrued award credits liabilities		9			3			—			12
Deferred revenue		49			(19	)		—			30
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	)
Deferred revenue for award credits		(55	)		(15	)		—			(70	)
Land value incremental tax		(95	)		—			—			(95	)
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
Valuation loss on financial assets		24			21			—			45
Impairment loss on assets		—			60			—			60
Estimated warranty liabilities		47			1			—			48
Valuation loss on onerous contracts		18			19			—			37
Share of profit or loss of associates and joint ventures accounted for using equity method		2			6			—			8
Accrued award credits liabilities		12			5			—			17
Deferred revenue		30			(15	)		—			15
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	)
Deferred revenue for award credits		(70	)		4			—			(66	)
Land value incremental tax		(95	)		—			—			(95	)
Intangible assets		(20	)		2			—			(18	)
Unrealized foreign exchange gain, net		(1	)		(11	)		—			(12	)
Others		(1	)		(9	)		—			(10	)
	$	(2,301	)	$	(160	)	$	—		$	(2,461	)

For the year ended December 31, 2024


	January 1, 2024			Recognized in Profit or Loss			Recognized in Other Comprehensive Income			December 31, 2024
	NT$			NT$			NT$			NT$
	(In Millions)
Deferred income tax assets
Temporary differences
Defined benefit pension plans	$	1,484		$	11		$	(450	)	$	1,045
Allowance for doubtful receivables over quota		143			(25	)		—			118
Valuation loss on inventory		76			3			—			79
Seniority bonus		69			6			—			75
Valuation loss on financial assets		45			29			—			74
Impairment loss on assets		60			—			—			60
Estimated warranty liabilities		48			8			—			56
Valuation loss on onerous contracts		37			8			—			45
Share of profit or loss of associates and joint ventures accounted for using equity method		8			7			—			15
Accrued award credits liabilities		17			(2	)		—			15
Deferred revenue		15			(10	)		—			5
Unrealized foreign exchange loss, net		3			(2	)		—			1
Others		25			48			—			73
		2,030			81			(450	)		1,661
Loss carryforwards		69			(69	)		—			—
	$	2,099		$	12		$	(450	)	$	1,661

Deferred income tax liabilities
Temporary differences
Defined benefit pension plans	$	(2,260	)	$	(142	)	$	(1	)	$	(2,403	)
Deferred revenue for award credits		(66	)		(45	)		—			(111	)
Land value incremental tax		(95	)		—			—			(95	)
Intangible assets		(18	)		2			—			(16	)
Unrealized foreign exchange gain, net		(12	)		6			—			(6	)
Valuation gain on financial assets, net		—			—			—			—
Others		(10	)		(17	)		—			(27	)
	$	(2,461	)	$	(196	)	$	(1	)	$	(2,658	)

Unused loss carryforwards and deductible temporary differences for which no deferred tax assets have been recognized in the consolidated balance sheets


	December 31
	2023		2024
	NT$		NT$
	(In Millions)
Loss carryforwards
Expire in 2024	$	1	$	—
Expire in 2025		15		17
Expire in 2026		8		10
Expire in 2027		3		3
Expire in 2028		1		1
Expire in 2029		1		2
Expire in 2030		—		1
Expire in 2031		—		1
Expire in 2032		5		6
Expire in 2033		13		20
Expire in 2034		—		12
	$	47	$	73

Investment credits - research and development expenditures
Expire in 2025	$	8	$	—

Deductible temporary differences	$	10	$	16

Information about unused investment credits and loss carryforwards

As of December 31, 2024, information about investment credits - research and development expenditures was as follows:


Remaining Creditable Amount		Expiry Year
NT$ (In Millions)
$	—	2025

As of December 31, 2024, information about unused loss carryforwards was as follows:


Remaining Creditable Amount		Expiry Year
NT$ (In Millions)
$	17	2025
	10	2026
	3	2027
	1	2028
	2	2029
	1	2030
	1	2031
	6	2032
	20	2033
	12	2034
$	73

Income tax examinations

Income tax returns of Chunghwa, SENAO, Youth, ISPOT, Aval, Wiin, SENYOUNG, CHYP, CHSI, LED, SHE, CHIEF, Unigate, CHPT, NavCore, TestPro, CHST, SFD, CLPT, CHTSC, HHI, IISI and UTC

have been examined by the tax authorities through 2022. Income tax returns of CHI have been examined by the tax authorities through 2023.

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.