Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Major Components of Income Tax Expense

The major components of income tax expense for the years ended December 31, 2017, 2016 and 2015 are:


	2017			2016			2015
Current tax expense:
Current year	Ps.	6,317		Ps.	8,574		Ps.	6,060

Deferred tax expense:
Origination and reversal of temporary differences		(1,698	)		(2,812	)		721
(Benefit) utilization of tax losses recognized		(65	)		(1,834	)		(2,230	)
Total deferred tax expense		(1,763	)		(4,646	)		(1,509	)

Total income tax expense in consolidated net income	Ps.	4,554		Ps.	3,928		Ps.	4,551


2017	Mexico			Foreign			Total
Current tax expense:
Current year	Ps.	3,874		Ps.	2,443		Ps.	6,317

Deferred tax expense:
Origination and reversal of temporary differences		(1,798	)		100			(1,698	)
Benefit (utilization) of tax losses recognized		179			(244	)		(65	)

Total deferred tax (benefit)		(1,619	)		(144	)		(1,763	)

Total income tax expense in consolidated net income	Ps.	2,255		Ps.	2,299		Ps.	4,554


2016	Mexico			Foreign			Total
Current tax expense:
Current year	Ps.	4,035		Ps.	4,539		Ps.	8,574

Deferred tax expense:
Origination and reversal of temporary differences		(1,117	)		(1,695	)		(2,812	)
Benefit of tax losses recognized		(1,285	)		(549	)		(1,834	)

Total deferred tax (benefit		(2,402	)		(2,244	)		(4,646	)

Total income tax expense in consolidated net income	Ps.	1,633		Ps.	2,295		Ps.	3,928


2015	Mexico			Foreign			Total
Current tax expense:
Current year	Ps.	3,887		Ps.	2,173		Ps.	6,060

Deferred tax expense:
Origination and reversal of temporary differences		427			294			721
Benefit of tax losses recognized		(997	)		(1,233	)		(2,230	)

Total deferred tax expense (benefit)		(570	)		(939	)		(1,509	)

Total income tax expense in consolidated net income	Ps.	3,317		Ps.	1,234		Ps.	4,551

Schedule of Recognized in Consolidated Statement of Other Comprehensive Income

Recognized in Consolidated Statement of Other Comprehensive Income (OCI)

Income tax related to items charged or recognized directly in OCI during the year:

2017

2016

2015

Unrealized (gain) loss on cash flow hedges

Ps.

(160

)

Ps.

324

Ps.

(19

)

Remeasurements of the net defined benefit liability

(61

)

Total income tax recognized in OCI

Ps.

(221

)

Ps.

336

Ps.

Schedule of Deferred Tax related to Other Comprehensive Income

Balance of income tax included in Accumulated Other Comprehensive Income (AOCI) as of:


Income tax related to items charged or recognized directly in OCI as of year end:	2017			2016			2015
Unrealized loss (gain) on derivative financial instruments	Ps.	59		Ps.	227		Ps.	(91	)

Comprehensive income to be reclassified to profit or loss in subsequent periods		59			227			(91	)

Re-measurements of the net defined benefit liability		(199	)		( 143	)		(112	)

Balance of income tax in OCI	Ps.	(140	)	Ps.	84		Ps.	(203	)

Schedule of Domestic Tax Rate

A reconciliation between tax expense and income before income taxes and share of the profit or loss of associates and joint ventures accounted for using the equity method multiplied by the Mexican domestic tax rate for the years ended December 31, 2017, 2016 and 2015 is as follows:


	2017			2016			2015
Mexican statutory income tax rate		30	%		30	%		30	%
Income tax from prior years		4.98			1.33			0.50
Income (loss) on monetary position for subsidiaries in hyperinflationary economies		6.72			(2.20	)		0.07
Annual inflation tax adjustment		(5.75	)		0.15			(2.22	)
Non-deductible expenses		(8.84	)		2.38			2.92
Non-taxable income		1.87			(0.90	)		(0.41	)
Income taxed at a rate other than the Mexican statutory rate		(3.5	)		2.06			0.75
Effect of restatement of tax values		8.72			(2.29	)		(1.16	)
Effect of change in statutory rate		0.31			—			0.11
Effect of changes in Venezuela Tax Law		—			7.74			—
Income tax credits		12.7			(7.84	)		—
Effect Venezuela (Note 3.3)		(119.13	)		—			—
Consolidation Profit Philippines		11.95			—			—
Tax Loss		(9.45	)
Other		5.28			(2.98	)		0.35

		(64.14	)%		27.45	%		30.91	%

Schedule of Deferred Income Tax

An analysis of the temporary differences giving rise to deferred income tax liabilities (assets) is as follows:


	Consolidated Statement of Financial Position as of						Consolidated Income Statement
Consolidated Statement of Financial Position	2017			2016			2017			2016			2015
Allowance for doubtful accounts	Ps.	(119	)	Ps.	(148	)	Ps.	16		Ps.	(8	)	Ps.	2
Inventories		(4	)		(14	)		10			(163	)		(15	)
Prepaid expenses		17			13			5			(71	)		7
Property, plant and equipment, net ⁽¹⁾		(244	)		1,599			(2,071	)		1,439			(96	)
Other assets		(569	)		(403	)		(166	)		167			41
Finite useful lived intangible assets		820			56			761			(289	)		112
Indefinite lived intangible assets		2,143			1,458			743			5,280			(26	)
Post-employment and other non-current employee benefits		(474	)		(229	)		(196	)		(1	)		115
Derivative financial instruments		42			86			(44	)		62			22
Contingencies		(2,629	)		(1,822	)		(807	)		(96	)		(7	)
Employee profit sharing payable		(159	)		(166	)		6			(14	)		(3	)
Tax loss carryforwards		(8,088	)		(8,101	)		(13	)		(1,834	)		(2,230	)
Tax credits to recover ⁽²⁾		(2,308	)		(1,150	)		(705	)		(1,150	)		—
Cumulative other comprehensive income		(141	)		84			(224	)		—			—
Deductible tax goodwill of business acquisition		—			160			(160	)		(1,921	)		1,378
Liabilities of amortization of goodwill of business acquisition		5,527			5,921			(394	)		45			(32	)
Other liabilities		(112	)		(2,120	)		1,476			(6,092	)		(777	)

Deferred tax (income)							Ps.	(1,763	)	Ps.	(4,646	)	Ps.	(1,509	)

Deferred tax, asset	Ps.	(8,012	)	Ps.	(5,981	)
Deferred tax, liability		1,714			1,205

Deferred income taxes, net	Ps.	(6,298	)	Ps.	(4,776	)

⁽¹⁾

As a result of the change of Venezuelan tax regulations, on December 31, 2016 the Company recognized a deferred tax liability for an amount of Ps. 1,107 with their corresponding impact on the income tax of the year. Such amount was derecognized during 2017 as a result of the deconsolidation of Venezuela.

⁽²⁾	Correspond to income tax credits arising from dividends received from foreign subsidiaries to be recovered within the next ten years accordingly to the Mexican Income Tax law as well as effects of the exchange of foreign currencies with Related and Non-Related Parties.

Schedule of Changes in Net Deferred Income Tax Asset

The changes in the balance of the net deferred income tax liability are as follows:


	2017			2016			2015
Balance at beginning of the year	Ps.	(4,776	)	Ps.	(2,975	)	Ps.	(1,871	)
Deferred tax provision for the year		(1,763	)		(4,381	)		(1,526	)
Change in the statutory rate		—			—			16
Acquisition of subsidiaries, see Note 4		(563	)		150			—
Venezuela effect		261			—			—
Effects in equity:
Unrealized loss (gain) on derivative financial instruments		(160	)		324			(19	)
Unrealized gain on available for sale securities		—			—			—
Cumulative translation adjustment		221			1,766			350
Remeasurements of the net defined benefit liability		(61	)		12			32
Inflation adjustment		543			328			43

Balance at end of the year	Ps.	(6,298	)	Ps.	(4,776	)	Ps.	(2,975	)

Schedule of Tax Loss Carryforwards

The tax losses carryforwards and their years of expiration are as follows:


	Tax Loss Carryforwards
2021	Ps.	15
2022		—
2023		—
2024		2
2025		4
2026 and thereafter		8,732
No expiration (Brazil and Colombia until 2016))		16,064

	Ps.	24,817

Summary of Changes in Balance of Tax Loss Carryforwards

The changes in the balance of tax loss carryforwards are as follows:


	2017			2016			2015
Balance at beginning of the year	Ps.	24,791		Ps.	14,900		Ps.	9,400
Increase (see sources above)		3,334			5,616			7,001
Usage of tax losses		(2,723	)		(4	)		(37	)
Effect of foreign currency exchange rates		(585	)		4,279			(1,464	)

Balance at end of the year	Ps.	24,817		Ps.	24,791		Ps.	14,900