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TAXATION | 12 Months Ended
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Dec. 31, 2018
TAXATION |
TAXATION | 30. TAXATION a. Prepaid income taxes The breakdown of prepaid income taxes is as follows:
|  | 2017 |  | 2018
The Company - Corporate Income Tax |  | 610 |  | 494
Subsidiaries - Corporate Income Tax |  | 175 |  | 420
Total |  | 785 |  | 914
Current portion |  | (22) |  | (20)
Non-current portion (Note 13) |  | 763 |  | 894
b. Prepaid other taxes The breakdown of prepaid other taxes is as follows:
|  | 2017 |  | 2018
The Company: |  |  |  |
Value Added Tax (“VAT”) |  | 1,967 |  | 2,167
Article 22 - Witholding tax on goods delivery and import |  | 1 |  | —
Article 23 - Witholding tax on service delivery |  | 44 |  | 63
Subsidiaries: |  |  |  |
VAT |  | 3,879 |  | 3,792
Article 23 - Withholding tax on services delivery |  | 17 |  | 1
Total |  | 5,908 |  | 6,023
Current portion |  | (2,833) |  | (3,325)
Non-current portion (Note 13) |  | 3,075 |  | 2,698
c. Current income tax liabilities The breakdown of current income tax liabilities is as follows:
|  | 2017 |  | 2018
The Company: |  |  |  |
Article 25 - Installment of corporate income tax |  | 1 |  | 1
Subsidiaries: |  |  |  |
Article 25 - Installment of corporate income tax |  | 37 |  | 14
Article 29 - Corporate income tax |  | 763 |  | 389
Total |  | 801 |  | 404
d. Other tax liabilities The breakdown of other tax liabilities is as follows:
|  | 2017 |  | 2018
The Company: |  |  |  |
Article 4 (2) - Final tax |  | 26 |  | 18
Article 21 - Individual income tax |  | 81 |  | 47
Article 22 - Withholding tax on goods delivery and imports |  | 3 |  | 3
Article 23 - Withholding tax on services |  | 29 |  | 36
Article 26 - Withholding tax on non-resident income |  | 1 |  | 3
VAT - Tax collector |  | 372 |  | 334
Sub-total |  | 512 |  | 441
Subsidiaries: |  |  |  |
Article 4 (2) - Final tax |  | 85 |  | 75
Article 21 - Individual income tax |  | 129 |  | 113
Article 22 - Withholding tax on goods delivery and imports |  | 3 |  | 5
Article 23 - Withholding tax on services |  | 115 |  | 110
Article 26 - Withholding tax on non-resident income |  | 303 |  | 7
VAT |  | 842 |  | 25
Sub-total |  | 1,477 |  | 335
Total |  | 1,989 |  | 776
e. The components of income tax expense (benefit) are as follows:
|  | 2016 |  | 2017 |  | 2018
Current |  |  |  |  |  |
The Company |  | 671 |  | 586 |  | 236
Subsidiaries |  | 10,067 |  | 10,771 |  | 9,196
Sub-total |  | 10,738 |  | 11,357 |  | 9,432
Deferred |  |  |  |  |  |
The Company |  | (844) |  | (1,608) |  | (159)
Subsidiaries |  | (877) |  | 209 |  | 93
Sub-total |  | (1,721) |  | (1,399) |  | (66)
Net income tax expense |  | 9,017 |  | 9,958 |  | 9,366
f. Reconciliation of income tax expense The reconciliation between the income tax expense calculated by applying the applicable tax rate of 20% to the profit before income tax less income subject to final tax, and the net income tax expense as shown in the consolidated statements of profit or loss and other comprehensive income is as follows:
|  | 2016 |  | 2017 |  | 2018
Profit before income tax |  | 38,166 |  | 42,628 |  | 36,077
Less: income subject to final tax - net |  | (1,684) |  | (1,491) |  | (1,277)
Net |  | 36,482 |  | 41,137 |  | 34,800
Income tax expense calculated at the Company’s applicable statutory tax rate of 20% |  | 7,296 |  | 8,228 |  | 6,960
Difference in applicable statutory tax rate for subsidiaries |  | 1,904 |  | 2,046 |  | 1,753
Non-deductible expenses |  | 496 |  | 767 |  | 423
Final income tax expense |  | 345 |  | 591 |  | 60
Deferred tax assets that cannot be utilized - net |  | 56 |  | 4 |  | (2)
Deferred tax assets on fixed assets revaluation for tax purpose |  | (1,415) |  | (1,796) |  | —
Others |  | 335 |  | 118 |  | 172
Net income tax expense |  | 9,017 |  | 9,958 |  | 9,366
The details of the net income tax expense for the years ended December 31, 2016, 2017 and 2018 are as follows:
|  | 2016 |  | 2017 |  | 2018
Estimated taxable income (loss) of the Company |  | 1,703 |  | (861) |  | 400
Corporate income tax: |  |  |  |  |  |
Current corporate income tax expense: |  |  |  |  |  |
The Company |  | 340 |  | — |  | 80
Subsidiaries |  | 10,053 |  | 10,766 |  | 9,193
Current income tax expense on tax assessment: |  |  |  |  |  |
The Company |  | — |  | — |  | 99
Final tax expense: |  |  |  |  |  |
The Company |  | 331 |  | 586 |  | 57
Subsidiaries |  | 14 |  | 5 |  | 3
Total income tax expense - current |  | 10,738 |  | 11,357 |  | 9,432
Income tax expense (benefit) - deferred - effect of temporary differences at enacted maximum tax rates: |  |  |  |  |  |
The Company |  |  |  |  |  |
Tax loss utilization (recognition) |  | — |  | (172) |  | 172
Cost to obtain contracts |  | — |  | — |  | 38
Net periodic pension and other post-employment benefits costs and provision for employee benefits |  | (214) |  | (235) |  | 5
Finance leases |  | 68 |  | 0 |  | 2
Valuation of long-term investments |  | (34) |  | — |  | —
Depreciation and gain on disposal or sale of property and equipment |  | (825) |  | (1,012) |  | (180)
Trade receivables write-off (provision for impairment of receivables) |  | 41 |  | (206) |  | (132)
Realization of accrual (accrual) of expenses and inventory write-off (provision for inventory obsolescence) |  | 142 |  | 26 |  | (36)
Amortization of (addition to) deferred installation fee |  | (10) |  | 1 |  | (18)
Amortization of intangible assets, land rights and others |  | (12) |  | (10) |  | (10)
Net |  | (844) |  | (1,608) |  | (159)
Telkomsel |  |  |  |  |  |
Finance leases |  | 164 |  | 177 |  | 170
Depreciation and gain on disposal or sale of property and equipment |  | (913) |  | (55) |  | 64
Amortization of (addition to) license |  | (4) |  | 12 |  | 58
Provision for impairment of receivables |  | (5) |  | (41) |  | (88)
Provision for employee benefits |  | (55) |  | (68) |  | (83)
Net |  | (813) |  | 25 |  | 121
Subsidiaries - others - net |  | (64) |  | 184 |  | (28)
Net income tax benefit - deferred |  | (1,721) |  | (1,399) |  | (66)
Income tax expense - net |  | 9,017 |  | 9,958 |  | 9,366
Tax Law No. 36/2008 with implementing rules under Government Regulation No. 56/2015 stipulates a reduction of 5% from the maximum rate applicable to qualifying listed companies, for those whose stocks are traded in the IDX which meet the prescribed criteria that the public owns 40% or more of the total fully paid and traded shares, and such shares are owned by at least 300 parties, with each party owning less than 5% of the total paid-up shares. These requirements must be met by a company for a period of 183 days in one tax year. The Company has met all of the required criteria; therefore, for the purpose of calculating income tax expense and liabilities for the financial reporting years ended December 31, 2016, 2017 and 2018, the Company has reduced the applicable tax rate by 5%. The Company applied the tax rate of 20% for the years ended December 31, 2016, 2017 and 2018. The subsidiaries applied the tax rate of 25% for the years ended December 31, 2016, 2017 and 2018. The Company will submit the above corporate income tax computation in its income tax return (“Surat Pemberitahuan Tahunan” or Annual Tax Return) for fiscal year 2018 that will be reported to the tax office based on prevailing regulations. The amount of corporate income tax for the year ended December 31, 2017, is different with what was reported in the annual tax return due to adjustment of fiscal correction from tax assessment for fiscal year 2016. g. Tax assessments (i) The Company On November 15, 2013, the Company received Tax Underpayment Assessment Letters (“SKPKBs”) for the underpayment of VAT for the period January to September and November 2007 amounting to Rp142 billion. On January 20, 2014, the Company filed its objection to the Tax Authorities, and in December 2014, Tax Authorities issued a decision which rejected the objections. The Compan y accepted the assessment on the underpayment of VAT amounting to Rp22 billion (including penalty of Rp10 billion). The accepted portion was charged to the 2014 consolidated statement of profit or loss and other comprehensive income. The portion of VAT international incoming call interconnection amounting to Rp120 billion (including penalty of Rp39 billion) is recognised as claim for tax refund. On March 12, 2015, the Company has filed an appeal to the Tax Court on the rejection of its objection to the assessment of VAT international incoming call interconnection. On August 1 and 2, 2017, the Tax Court issued a verdict regarding to VAT international incoming call interconnection appeal process. The verdict stated that the international incoming call interconnection is the taxable services and categorized as export service that subject to 0% VAT and granted all the Company’s appeal. In September 2017, the Company received tax refund amounting to Rp115 billion and for remaining balance amounting to Rp5 billion has been compensated to tax collection letter ("STP") for withholding tax article 21 and SKPKBs of VAT on tax collected and self-assessed offshore VAT. On October 26 and November 23, 2017, the Company received a notification from Tax Court that Tax Authorities filed a request for judicial review. On November 23 and December 21, 2017, to response the judicial review from Tax Authorities, the Company sent contra memorandum for judicial review to Supreme Court (“SC”). In September and November 2018, the Company received the verdict from the SC as the result of the tax audit for tax period June to August and November 2007. Based on the verdict, the SC rejected the Tax Authorities' judicial review and strengthen the Tax Court's verdict. As of the date of approval and authorization for the issuance of these consolidated financial statements, the judicial review for tax period May 2007 is still in process. In November 2014, the Company received SKPKBs from the Tax Authorities as the result of the tax audit for fiscal year 2011. Based on the letters, the Company received VAT underpayment assessment for the tax period January to December 2011 amounting to Rp182.5 billion (including penalty of Rp60 billion) and corporate income tax underpayment amounting to Rp2.8 billion (including penalty of Rp929 million). The accepted portion amounting to Rp4.7 billion (including penalty of Rp2 billion) was charged to the 2014 consolidated financial statement of profit or loss and other comprehensive income. The portion of VAT international incoming call interconnection amounting to Rp178 billion (including penalty of Rp58 billion) is recognised as claim for tax refund. On January 7, 2015, the Company filed an objection and on October 20, 2015, Tax Authorities issued a rejection regarding this objection. On January 20, 2016, the Company filed an appeal on the decision of its objection. On April 4 and 5, 2017, the Tax Court issued a verdict regarding to VAT international incoming call interconnection appeal process. The verdict stated that the international incoming call interconnection is the taxable services and categorized as export service that subject to 0% VAT and granted the Company’s appeal for the tax period January and September to December 2011. Tax Court rejected the Company’s appeal for the tax period February to August 2011, since the Company did not meet the administrative requirement. Regarding this rejection, on June 19 and 21, 2017, the Company filed the request for judicial review. On October 15, 2018, the Company received a notification from Tax Court that Tax Authorities filed a request for judicial review for the tax period January and September to December 2011. On November 13, 2018, to response the judicial review from Tax Authorities, the Company sent contra memorandum for judicial review to SC for the tax period January and September to December 2011. In November 2018, the Company received a notification from Tax Court that Tax Authorities filed a contra memorandum for judicial review for the tax period February to August 2011. As of the date of approval and authorization for the issuance of these consolidated financial statements, the judicial review is still in process. On May 3, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for tax period January to December 2012. On November 3, 2016, Tax Authorities issued SKPKBs for fiscal year 2012, wherein the Company was liable for underpayment of corporate income tax amounting to Rp991.6 billion (including penalty of Rp321.6 billion), VAT underpayment amounting to Rp467 billion (including penalty of Rp153.5 billion), self-assessed offshore VAT underpayment amounting to Rp1.2 billion (including penalty of Rp392 million), VAT on tax collected underpayment amounting to Rp57 billion (including penalty of Rp18.5 billion). The Company also received STP for VAT amounting to Rp37.5 billion, withholding tax article 21 underpayment amounting to Rp16.2 billion (including penalty of Rp5.3 billion), final withholding tax article 21 underpayment amounting to Rp1.2 billion (including penalty of Rp407 million), withholding tax article 23 underpayment amounting to Rp63.5 billion (including penalty of Rp20.6 billion), withholding tax article 4(2) underpayment amounting to Rp25 billion (including penalty of Rp8.1 billion) and withholding tax article 26 underpayment amounting to Rp197.6 billion (including penalty of Rp64 billion). The Company has agreed to the recalculation of input tax credit on international incoming call interconnection services amounting to Rp35 billion, corporate income tax amounting to Rp613 million and withholding tax article 26 amounting to Rp311.5 million that have been charged in the 2016 consolidated statement of profit or loss and other comprehensive income. The Company filed an objection regarding to the remaining assessments on November 16, 2016. On March 1, 2017 and May 9, 2017, the Company received the Decision Letter from Directorate General of Taxes ("DGT") for the underpayment of self-assessed offshore VAT amounting to Rp1.8 million (including penalty of Rp0.6 million) and the underpayment of VAT on tax collected amounting to Rp4.4 billion (including penalty of Rp1.4 billion). The Company decided to accept the decision. On October 19, 2017, the Tax Authorities issued Decision Letter on Company’s objections, wherein the Tax Authorities has reduced Company’s underpayment. Based on Decision Letter, the Company was liable for underpayment of withholding tax article 21 amounting to Rp20.7 billion (including penalty of Rp6.7 billion), underpayment of final withholding tax article 21 amounting to Rp23.8 billion (including penalty of Rp7.7 billion), underpayment of withholding tax article 23 amounting to Rp115.7 billion (including penalty of Rp37.5 billion), underpayment of withholding tax article 4(2) amounting to Rp25 billion (including penalty of Rp8.1 billion), underpayment of withholding tax article 26 amounting to Rp197.6 billion (including penalty of Rp64.1 billion) and underpayment of corporate income tax amounting to Rp496.4 billion (including penalty of Rp161 billion). On October 30 and 31, 2017, the Tax Authorities issued Decision Letter on Company’s objection, wherein the Tax Authorities has reduced Company’s underpayment for VAT from the tax period January to December 2012 totaling to Rp429.3 billion (including penalty of Rp141.2 billion). On January, 17 and 26, 2018, the Company filed an appeal on the rejection of its objection. As of the date of approval and authorization for the issuance of these consolidated financial statements, the appeal is still in process. On August 23, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for tax period January to December 2015 regarding overpayment of corporate income tax amounting to Rp414 billion. On April 25, 2017, the Tax Authorities issued Tax Overpayment Assessment Letter (“SKPLB”) for overpayment of corporate income tax amounting to Rp147 billion, and SKPKBs for underpayment of VAT amounting to Rp13 billion (including penalty of Rp4 billion), underpayment of VAT on tax collected amounting to Rp6 billion (including penalty of Rp1.5 billion), underpayment of self-assessed offshore VAT amounting to Rp55 billion (including penalty of Rp17 billion). The Company also received STP for VAT amounting to Rp34 billion, VAT on tax collected amounting to Rp7 billion and self-assessed offshore VAT amounting to Rp8 billion. The Company accepted tax audit decision amounting to Rp17 billion for corporate income tax, to transfer deductible temporary differences related to provision for incentives to fixed wireless (Flexi) subscribers’ migration amounting to Rp42 billion from Annual Tax Return of corporate income tax fiscal year 2015 to Annual Tax Return of corporate income tax fiscal year 2016. The Company also accepted underpayment of VAT, underpayment of VAT on tax collected and STP for VAT on tax collected totaling to Rp26 billion. The accepted portion was charged to the 2017 consolidated financial statement of profit or loss and other comprehensive income. On July 24, 2017, the Company filed Objection Letter to the Tax Authorities for corporate income tax amounting to Rp210.5 billion and self-assessed offshore VAT amounting to Rp55 billion. On May 3 and 22, 2018, the Tax Authorities issued Decision Letter on Company’s objections for SKPLB of self-assessed offshore VAT amounting to Rp54 billion and granted all the Company’s objection. On July 18, 2018, the Tax Authorities issued Decision Letter on Company’s objections for SKPLB of corporate income tax, wherein the Tax Authorities has granted the several Company’s objection and additional amount of overpayment which should be received amounting to Rp76 billion. On October 10, 2018, the Company filed an appeal. As of the date of approval and authorization for the issuance of these consolidated financial statements, the appeal is still in process. On August 25, 2017, the Tax Authorities issued Field Tax Audit Notification Letter for tax periods January to December 2016 regarding overpayment of corporate income tax amounting to Rp114.4 billion. On June 7, 2018, Tax Authorities issued SKPLB of corporate income tax amounting to Rp15.3 billion, SKPKB of withholding tax article 26 amounting to Rp557 million (including penalty of Rp180 million) and SKPLB of VAT amounting to Rp923 billion. The Company accepted the assessment on the overpayment of corporate income tax amounting to Rp15.3 billion and for the remaining balance amounting to Rp99.1 billion was charged as current income tax expense on tax assesment, underpayment of withholding tax article 26 and correction of VAT In totaling to Rp10.5 billion, STP for VAT on tax collected amounting to Rp7.1 billion, VAT on free gifts amounting to Rp7.3 billion, VAT on transfer asset amounting to Rp1.2 billion and STP for VAT amounting to Rp1.7 billion. The accepted portion was charged to the consolidated financial statement of profit or loss and other comprehensive income. In July 2018, the Company received tax refund amounting to Rp882.7 billion and for the remaining balance amounting to Rp39.9 billion has been compensated to STP for VAT amounting to Rp31.9 billion, VAT on tax collected amounting to Rp7.1 billion, withholding tax article 23 amounting to Rp556 million and withholding tax article 21 amounting to Rp300 million. On August 31, 2018, the Company filed an objection to the Tax Authorities for VAT international incoming call interconnection services amounting to Rp151 billion and STP for VAT amounting to Rp30.3 billion. As of the date of approval and authorization for the issuance of these consolidated financial statements, the objection is still in process. On September 11, 2017 and January 9, 2018, the Tax Authorities issued Field Tax Audit Notification Letter for tax period December and November 2014 regarding claim for tax refund overpayment of VAT correction for tax period November and December 2014 amounting to Rp129 billion and Rp86.7 billion, respectively. On July 25 and September 7, 2018, the Company received SKPLB for tax period December and November 2014. On August 24, 2018, the Company received tax refund amounting to Rp122.5 billion for December 2014 period. In October 2018, the Company received tax refund amounting to Rp80.8 billion and for the remaining balance amounting to Rp3.6 billion has been compensated to SKPKBs for self-assessed offshore VAT for tax period March, April and June 2015, STP for VAT for tax period November 2014, and other tax assessment letters. On November 6, 2018, the Tax Authorities issued Field Tax Audit Notification Letter for tax period 2017 for all taxes. As of the date of approval and authorization for the issuance of these consolidated financial statements, the tax audit is still in process. (ii) Telkomsel In December 2013, the Tax Court accepted Telkomsel’s appeal on the 2006 VAT and withholding taxes totaling Rp116 billion. In February 2014, Telkomsel received the refund. On July 3, 2015, in response to Telkomsel’s letter claiming for interest income related to favorable 2006 VAT and withholding tax verdicts, the Tax Authorities informed Telkomsel that the claim cannot be granted since the Tax Authorities filed a request for judicial review to the SC. On August 19, 2016, Telkomsel received a notification from the Tax Court that the Tax Authorities filed a request for judicial review to SC for the VAT case amounting to Rp108 billion. Telkomsel filed a contra memorandum for judicial review to the SC on September 14, 2016. In April 2017, Tax Authorities has granted Telkomsel’s claim on interest income will be compensate against corporate income tax installment for the period of April 2017. In July 2018, Telkomsel received the official verdict from the SC which rejected the Tax Authorities request. On April 21, 2010, the Tax Authorities filed a request for judicial review to the SC for the Tax Court’s acceptance of Telkomsel’s request to cancel the STP for the underpayment of December 2008 income tax article 25 amounting to Rp429 billion (including a penalty of Rp8.4 billion). In May 2010, Telkomsel filed a contra memorandum for judicial review to the SC. On March 2, 2017, Telkomsel received the official verdict from the SC which accept the Tax Authorities request. The penalty was paid in June 2017. In May and June 2012, Telkomsel received the refund of the penalty on the 2010 income tax article 25 underpayment amounting to Rp15.7 billion based on the Tax Court’s verdict. On July 17, 2012, the Tax Authorities filed a request for judicial review to the SC on the Tax Court’s Verdict. On September 14, 2012, Telkomsel filed a contra memorandum for judicial review to the SC. In July 2016, conservatively, Telkomsel recognised the tax penalty of Rp15.7 billion as expense based on its previous experience on a similar income tax case. On May 24, 2012, Telkomsel filed an objection to the Tax Authorities for the 2010 underpayment of VAT of Rp290.6 billion (including penalty of Rp67 billion) and recorded it as a claim for tax refund. On May 9, 2017, Telkomsel received the official verdict from the SC which rejected Telkomsel’s request, therein Telkomsel paid the underpayment on July 10, 2017. On July 19, 2017, Telkomsel filed the second judicial review to contest against the SC’s verdict. On August 8, 2018, the SC accepted Telkomsel’s request. Telkomsel received Surat Pelaksanaan Putusan Peninjauan Kembali (“SP2PK”). In July and October 2017, Telkomsel received notifications that the Tax Authorities had filed a request for judicial reviews to the SC for cases relating to corporate income tax and VAT amounting to Rp62 billion and Rp1.2 billion, respectively. Telkomsel submitted its contra memorandum for judicial review in August and November 2017. As of the date of approval and authorization for the issuance of these consolidated financial statements, Telkomsel has received partial official verdicts from the SC which rejected the Tax Authorities’s request for VAT case amounting to Rp1.1 billion. On July 28, 2016 and March 24, 2017, Telkomsel received the tax audit instruction letter for compliance of fiscal year 2014 and 2015, respectively. As of the date of approval and authorization for the issuance of these consolidated financial statements, the tax audit is still in progress. h. Tax incentives In December 2015, the Company took advantage of the Economic Policy Package V in the form of tax incentives for fixed assets revaluation as stipulated in the Ministry of Finance Regulation (“PMK”) No. 191/PMK.010/2015 juncto PMK No. 233/PMK.03/2015 juncto PMK No. 29/PMK.03/2016. In accordance with the PMK, the Company is allowed to revalue its fixed assets for tax purposes and will obtain lower income tax when the application of the revaluation is submitted to DGT during the period between the effective date of PMK and December 31, 2016. The final income tax is determined at a rate ranging from 3%‑6% on the excess of the revalued amount of fixed assets over its original net book value depending on the timing of submission of application to the DGT. On December 29, 2015, the Company filed an application for fixed assets revaluation using self-assessed revaluation amount and has paid the related final income tax amounting to Rp750 billion. Based on the PMK, the self-assessed revaluation amount should be evaluated by a Public Independent Appraiser (“KJPP”) or valuation specialist, which is registered with the Government before December 31, 2016. Upon verification of the completeness and accuracy of the application, the DGT may issue approval letter within 30 days after the receipt of complete application. The Company has appointed a KJPP to perform fixed assets revaluation of the Company. The Company submitted the fixed asset revaluation documents phase 1 to DGT on September 29, 2016. On November 10, 2016, DGT issued approval regarding fixed assets revaluation amounting to Rp7,078 billion with related final income tax amounting to Rp212 billion. On December 15, 2016, the Company submitted its fixed assets revaluation application for Phase 2 to DGT and expects to be eligible for 6% tax rate. In its application, the Company estimated a revaluation increment of Rp8,961 billion with estimated final income tax of Rp538 billion. In 2017, t he Company received fixed asset revaluation report from KJPP. Based on the report, the value of fixed asset increased amounting to Rp8,982 billion with related final income tax amounting to Rp540 billion. The Company has paid final income tax amounting to Rp2 billion as addition on September 22, 2017 and November 15, 2017. On November 21, 2017, DGT issued approval regarding fixed assets revaluation amounting to Rp8,982 billion with related final income tax amounting to Rp540 billion. A deductible temporary difference arose on this fixed assets revaluation for tax purposes since the tax base of the fixed assets is higher than their carrying amount. The deductible temporary difference results in a deferred tax asset since the economic benefits will flow to the Company in a form of reduction of taxable income in the future periods when the assets are recovered. In 2016 and 2017, the Company recognised deferred tax assets amounting to Rp1,415 billion and Rp1,796 billion, respectively, on the phase 1 and phase 2 revaluation increment on fixed assets as approved by the DGT. i. Deferred tax assets and liabilities The details of deferred tax assets and liabilities are as follows:
|  |  |  |  |  | (Charged) |  | Credited to other |  | (Charged) |  |
|  |  |  | December 31, |  | credited to profit |  | comprehensive |  | credited |  | December 31,
|  |  |  | 2016 |  | or loss |  | income |  | to equity |  | 2017
The Company |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Net periodic pension and other post-employment benefit costs |  |  |  | 563 |  | 197 |  | 342 |  | — |  | 1,102
Provision for impairment of receivables |  |  |  | 388 |  | 206 |  | — |  | — |  | 594
Provision for employee benefits |  |  |  | 209 |  | 38 |  | — |  | — |  | 247
Difference between accounting and tax bases of property and equipment |  |  |  | (772) |  | 1,012 |  | — |  | — |  | 240
Fiscal loss |  |  |  | — |  | 172 |  | — |  | — |  | 172
Deferred installation fee |  |  |  | 75 |  | (1) |  | — |  | — |  | 74
Accrued expenses and provision for inventory obsolescence |  |  |  | 69 |  | (26) |  | — |  | — |  | 43
Finance leases |  |  |  | 1 |  | (0) |  | — |  | — |  | 1
Total deferred tax assets |  |  |  | 533 |  | 1,598 |  | 342 |  | — |  | 2,473
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Valuation of long-term investment |  |  |  | (11) |  | — |  | — |  | — |  | (11)
Land rights, intangible assets and others |  |  |  | (11) |  | 10 |  | — |  | — |  | (1)
Total deferred tax liabilities |  |  |  | (22) |  | 10 |  | — |  | — |  | (12)
Deferred tax assets of the Company - net |  |  |  | 511 |  | 1,608 |  | 342 |  | — |  | 2,461
Deferred tax assets of the other subsidiaries - net |  |  |  | 258 |  | (20) |  | 9 |  | 96 |  | 343
Telkomsel |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Provision for employee benefits |  |  |  | 478 |  | 68 |  | 131 |  | — |  | 677
Provision for impairment of receivables |  |  |  | 143 |  | 41 |  | — |  | — |  | 184
Total deferred tax assets |  |  |  | 621 |  | 109 |  | 131 |  | — |  | 861
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Finance leases |  |  |  | (549) |  | (177) |  | — |  | — |  | (726)
Difference between accounting and tax bases of property and equipment |  |  |  | (482) |  | 55 |  | — |  | (125) |  | (552)
License amortization |  |  |  | (48) |  | (12) |  | — |  | — |  | (60)
Total deferred tax liabilities |  |  |  | (1,079) |  | (134) |  | — |  | (125) |  | (1,338)
Deferred tax liabilities of Telkomsel - net |  |  |  | (458) |  | (25) |  | 131 |  | (125) |  | (477)
Deferred tax liabilities of the other subsidiaries - net |  |  |  | (287) |  | (164) |  | 12 |  | (17) |  | (456)
Total deferred tax liabilities - net |  |  |  | (745) |  | (189) |  | 143 |  | (142) |  | (933)
Total deferred tax assets - net |  |  |  | 769 |  | 1,588 |  | 351 |  | 96 |  | 2,804
|  |  |  | Effect of |  |  |  |  |  |  |  |
|  |  |  | Adoption |  |  |  |  |  |  |  |
|  |  |  | of new |  | (Charged) |  | Charged to other |  |  |  |
|  | December 31, |  | accounting |  | credited to profit |  | comprehensive |  | Charged |  | December 31,
|  | 2017 |  | standards |  | or loss |  | income |  | to equity |  | 2018
The Company |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Net periodic pension and other post-employment benefit costs |  | 1,102 |  | — |  | 27 |  | (466) |  | — |  | 663
Provision for impairment of receivables |  | 594 |  | (40) |  | 132 |  | — |  | — |  | 686
Provision for employee benefits |  | 247 |  | — |  | (32) |  | — |  | — |  | 215
Difference between accounting and tax bases of property and equipment |  | 240 |  | — |  | 180 |  | — |  | — |  | 420
Deferred installation fee |  | 74 |  | — |  | 18 |  | — |  | — |  | 92
Accrued expenses and provision for inventory obsolescence |  | 43 |  | — |  | 36 |  | — |  | — |  | 79
Land rights, intangible assets and others |  | (1) |  | — |  | 10 |  | — |  | — |  | 9
Fiscal loss |  | 172 |  | — |  | (172) |  | — |  | — |  | —
Total deferred tax assets |  | 2,471 |  | (40) |  | 199 |  | (466) |  | — |  | 2,164
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Cost to obtain contracts |  | — |  | (42) |  | (38) |  | — |  | — |  | (80)
Valuation of long-term investment |  | (11) |  | — |  | — |  | — |  | — |  | (11)
Finance leases |  | 1 |  | — |  | (2) |  | — |  | — |  | (1)
Total deferred tax liabilities |  | (10) |  | (42) |  | (40) |  | — |  | — |  | (92)
Deferred tax assets of the Company - net |  | 2,461 |  | (82) |  | 159 |  | (466) |  | — |  | 2,072
Deferred tax assets of the other subsidiaries - net |  | 343 |  | 0 |  | 75 |  | (8) |  | (5) |  | 405
Telkomsel |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Provision for employee benefits |  | 677 |  | — |  | 83 |  | (119) |  | — |  | 641
Provision for impairment of receivables |  | 184 |  | 98 |  | 88 |  | — |  | — |  | 370
Total deferred tax assets |  | 861 |  | 98 |  | 171 |  | (119) |  | — |  | 1,011
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Finance leases |  | (726) |  | — |  | (170) |  | — |  | — |  | (896)
Difference between accounting and tax bases of property and equipment |  | (552) |  | — |  | (64) |  | — |  | — |  | (616)
License amortization |  | (60) |  | — |  | (58) |  | — |  | — |  | (118)
Total deferred tax liabilities |  | (1,338) |  | — |  | (292) |  | — |  | — |  | (1,630)
Deferred tax liabilities of Telkomsel - net |  | (477) |  | 98 |  | (121) |  | (119) |  | — |  | (619)
Deferred tax liabilities of the other subsidiaries - net |  | (456) |  | (16) |  | (47) |  | (5) |  | (54) |  | (578)
Total deferred tax liabilities - net |  | (933) |  | 82 |  | (168) |  | (124) |  | (54) |  | (1,197)
Total deferred tax assets - net |  | 2,804 |  | (82) |  | 234 |  | (474) |  | (5) |  | 2,477
As of December 31, 2017 and 2018, the aggregate amounts of temporary differences associated with investments in subsidiaries and associated companies, for which deferred tax liabilities have not been recognised were Rp31,783 billion and Rp31,296 billion, respectively. Realization of the deferred tax assets is dependent upon the Group’s capability in generating future profitable operations. Although realization is not assured, the Group believes that it is probable that these deferred tax assets will be realized through reduction of future taxable income when temporary differences reverse. The amount of deferred tax assets is considered realizable; however, it can be reduced if actual future taxable income is lower than estimates. j. Administration From 2008 to 2018, the Company has been consecutively entitled to income tax rate reduction of 5% for meeting the requirements in accordance with the Government Regulation No. 81/2007 as amended by Government Regulation No. 77/2013 and the latest by Government Regulation No. 56/2015 in conjunction with PMK No. 238/PMK.03/2008. On the basis of historical data, for the year ended December 31, 2018, the Company calculates the deferred tax using the tax rate of 20%. The taxation laws of Indonesia require that the Company and its local subsidiaries submit individual tax returns on the basis of self-assessment. Under prevailing regulations, the DGT may assess or amend taxes within a certain period. For fiscal years 2007 and earlier, the period is within ten years from the time the tax became due, but not later than 2013, while for fiscal years 2008 and onwards, the period is within five years from the time the tax became due. The Ministry of Finance of the Republic of Indonesia has issued Regulation No. 85/PMK.03/2012 dated June 6, 2012 as amended by PMK No. 136 ‑ PMK.03/2012 dated August 16, 2012 concerning the appointment of State-Owned Enterprises ("SOEs") to withhold, deposit and report VAT and Sales Tax on Luxury Goods ("PPnBM") according to the procedures outlined in the Regulation which is effective from July 1, 2012. The Ministry of Finance of the Republic of Indonesia also has issued Regulation No. 224/PMK.011/2012 dated December 26, 2012 concerning the appointment of SOEs to withhold income tax article 22 as amended by PMK No. 16/PMK.010/2016 dated February 3, 2016. The Company has withheld, deposited, and reported the VAT, PPnBM and also income tax article 22 in accordance with the Regulations.

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