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Current Taxes and Deferred Taxes

12 Months Ended

Dec. 31, 2019

Major components of tax expense (income) [abstract]

17.	Current Taxes and Deferred Taxes:

(a)

Current Tax:

The Bank and its subsidiaries at the end of each year, have constituted a First Category Income Tax Provision, which was determined based on current tax regulations, and has been reflected in the statement of financial position net of taxes to be recovered or payable, as applicable, as of December 31, 2018 and 2019, according to the following detail:

	2018			2019
	MCh$			MCh$

Income taxes		134,781			222,266
Less:
Monthly prepaid taxes (PPM)		(126,917	)		(143,200	)
Credit for training expenses		(2,224	)		(1,900	)
Other		(1,410	)		(1,234	)
Total tax (receivable) payable, net		4,230			75,932

	2018			2019
	MCh$			MCh$

Current tax assets		677			357
Current tax liabilities		(4,907	)		(76,289	)
Total tax receivable (payable), net		(4,230	)		(75,932	)

(b)

Income Tax:

The Bank's tax expense recorded for the years ended December 31, 2017, 2018 and 2019 is detailed as follows:

	2017			2018			2019
	MCh$			MCh$			MCh$
Income tax expense:
Current year taxes		105,024			143,136			232,404
Tax from previous period		(1,401	)		2,574			(331	)
Subtotal		103,623			145,710			232,073
(Credit) charge for deferred taxes:
Origin and reversal of temporary differences		20,043			11,435			(58,733	)
Effect of changes in tax rate		(5,729	)		―			―
Subtotal		14,314			11,435			(58,733	)
Other		(2,576	)		2,623			321
Net charge to income for income taxes		115,361			159,768			173,661

Tax Rate		25.50	%		27.00	%		27.00	%

(c)

Reconciliation of effective tax rate:

The following table reconciles the income tax rate to the effective rate applied to determine the Bank's income tax expense as of December 31, 2017, 2018 and 2019:

	2017						2018						2019
	Tax rate %			MCh$			Tax rate %			MCh$			Tax rate %			MCh$
Income tax calculated on net income before tax		25.50			175,298			27.00			206,116			27.00			209,901
Subordinated Debt Payment ^(*)		(5.67	)		(38,997	)		(3.21	)		(24,515	)		―			―
Additions or deductions ^(**)		(2.88	)		(19,794	)		(4.18	)		(31,894	)		(5.10	)		(39,612	)
Effect of changes in tax rate		(0.83	)		(5,729	)		―			―			―			―
Other		0.67			4,583			1.32			10,061			0.43			3,372
Effective rate and income tax expense		16.79			115,361			20.93			159,768			22.34			173,661

(*)	The tax expense related to the subordinated debt held by SAOS S.A, it ended during the current fiscal year, as a result of the generation of sufficient resources to pay off the total debt.

(**)	The deductions of the tax rate for 2017, 2018 and 2019 mainly relate to permanent differences between tax and financial accounting rules.

(d)

Effect of deferred taxes on income and equity:

The effects of deferred taxes on assets, liabilities and income accounts are detailed as follows:

	Balance as of		Effect						Balance as of		Effect						Balance as of
	January 1, 2018		Income			Equity			December 31, 2018		Income			Equity			December 31, 2019
	MCh$		MCh$			MCh$			MCh$		MCh$			MCh$			MCh$
Debit differences:
Allowances for loan losses		138,643		3,232			―			141,875		9,606			―			151,481
Personnel provisions		12,521		756			―			13,277		3,720			―			16,997
Staff vacations		6,908		333			―			7,241		203			―			7,444
Accrued interest and indexation adjustments from past due loans		3,414		(182	)		―			3,232		442			―			3,674
Staff severance indemnities provision		1,457		(8	)		35			1,484		(59	)		66			1,491
Provisions of credit card expenses		8,955		858			―			9,813		(1,592	)		―			8,221
Provisions of accrued expenses		16,358		(9,450	)		―			6,908		3,656			―			10,564
Derivative instruments adjustments		―		1,356			―			1,356		114			―			1,470
Adjustment for valuation and impairment of financial assets at fair value through OCI		―		(419	)		1,365			946		―			(946	)		―
Leasing		32,549		669			―			33,218		8,574			―			41,792
Other adjustments		6,246		(5,233	)		1			1,014		35,510			(1	)		36,523
Total debit differences		227,051		(8,088	)		1,401			220,364		60,174			(881	)		279,657
Credit differences:
Depreciation of property and equipment and investment properties		14,281		709			―			14,990		534			―			15,524
Adjustment for valuation and impairment of financial assets at fair value through OCI		2,392		―			(2,392	)		―		(937	)		3,382			2,445
Transitory assets		5,486		28			―			5,514		2,815			―			8,329
Derivative instruments adjustments		4,378		(4,378	)		―			―		―			―			―
Accrued interest to effective rate		1,603		(39	)		―			1,564		(183	)		―			1,381
Advance payment of lump-sum under union contracts		―		6,699			―			6,699		(3,365	)		―			3,334
Intangible assets amortization		5,503		―			―			5,503		―			―			5,503
Other adjustments		8,943		328			―			9,271		2,577			―			11,848
Total credit differences		42,586		3,347			(2,392	)		43,541		1,441			3,382			48,364
Total Assets (Liabilities), net		184,465		(11,435	)		3,793			176,823		58,733			(4,263	)		231,293