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CURRENT AND DEFERRED TAXES | 12 Months Ended
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Dec. 31, 2018
Major components of tax expense (income) [abstract] |
CURRENT AND DEFERRED TAXES | NOTE 18 - CURRENT AND DEFERRED TAXES In the year ended December 31, 2018, the income tax provision was calculated for such period, applying the partially integrated taxation system and a rate of 27%, in accordance with the Law No. 20,780 published in the Official Journal of the Republic of Chile on September 29, 2014. The effect in the income statement for deferred tax corresponds to the variation of the year, of the assets and liabilities for deferred taxes generated by temporary differences and tax losses. There are the permanent differences that give rise to an accounting value of the assets and liabilities other than their tax value, no deferred tax has been recorded since they are caused by transactions that are recorded in the financial statements and that will not affect the expense tax for income tax.
| (a) | Current taxes
| (a.1) | The composition of the current tax assets is the following:
|  | Current assets |  |  | Non-current assets |  |  | Total assets |
|  | As of |  |  | As of |  |  | As of |  |  | As of |  |  | As of |  |  | As of |
|  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Provisional monthly payments (advances) |  |  | 48,480 |  |  |  | 65,257 |  |  |  | - |  |  |  | - |  |  |  | 48,480 |  |  |  | 65,257 |
Other recoverable credits |  |  | 20,654 |  |  |  | 12,730 |  |  |  | 757 |  |  |  | 17,532 |  |  |  | 21,411 |  |  |  | 30,262 |
Total assets by current tax |  |  | 69,134 |  |  |  | 77,987 |  |  |  | 757 |  |  |  | 17,532 |  |  |  | 69,891 |  |  |  | 95,519 |
| (a.2) | The composition of the current tax liabilities are as follows:
|  | Current liabilities |  |  | Non-current liabilities |  |  | Total liabilities |
|  | As of |  |  | As of |  |  | As of |  |  | As of |  |  | As of |  |  | As of |
|  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Income tax provision |  |  | 3,738 |  |  |  | 3,511 |  |  |  | - |  |  |  | - |  |  |  | 3,738 |  |  |  | 3,511 |
Total liabilities by current tax |  |  | 3,738 |  |  |  | 3,511 |  |  |  | - |  |  |  | - |  |  |  | 3,738 |  |  |  | 3,511 |
| (b) | Deferred taxes
The balances of deferred tax are the following:
|  | Assets |  |  | Liabilities |
|  | As of |  |  | As of |  |  | As of |  |  | As of |
Concept |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Depreciation |  |  | 225,967 |  |  |  | 210,855 |  |  |  | 1,225,199 |  |  |  | 1,401,277 |
Leased assets |  |  | (75,136 | ) |  |  | (103,201 | ) |  |  | 508,128 |  |  |  | 275,142 |
Amortization |  |  | (983 | ) |  |  | (484 | ) |  |  | 55,880 |  |  |  | 54,335 |
Provisions |  |  | (38,303 | ) |  |  | (9,771 | ) |  |  | (75,631 | ) |  |  | 690 |
Revaluation of financial instruments |  |  | 445 |  |  |  | (734 | ) |  |  | 458 |  |  |  | (4,484 | )
Tax losses |  |  | 170,980 |  |  |  | 290,973 |  |  |  | (1,198,170 | ) |  |  | (1,188,586 | )
Intangibles |  |  | - |  |  |  | - |  |  |  | 351,238 |  |  |  | 406,536 |
Others |  |  | (9,643 | ) |  |  | (23,617 | ) |  |  | 5,019 |  |  |  | 4,787 |
Total |  |  | 273,327 |  |  |  | 364,021 |  |  |  | 872,121 |  |  |  | 949,697 |
The balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed in the long term. Movements of Deferred tax assets and liabilities
| (a) | From January 1 to December 31, 2016
|  | Opening |  |  | Recognized in |  |  | Recognized in |  |  | Exchange |  |  |  |  |  | Ending |
|  | balance |  |  | consolidated |  |  | comprehensive |  |  | rate |  |  |  |  |  | balance |
|  | Assets/(liabilities) |  |  | income |  |  | income |  |  | variation |  |  | Others |  |  | Asset (liability) |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Depreciation |  |  | (1,130,991 | ) |  |  | (241,435 | ) |  |  | - |  |  |  | (3,599 | ) |  |  | - |  |  |  | (1,376,025 | )
Leased assets |  |  | (251,302 | ) |  |  | 14,833 |  |  |  | - |  |  |  | (3,289 | ) |  |  | - |  |  |  | (239,758 | )
Amortization |  |  | (71,164 | ) |  |  | (4,375 | ) |  |  | - |  |  |  | (1,941 | ) |  |  | - |  |  |  | (77,480 | )
Provisions |  |  | 378,537 |  |  |  | (149,969 | ) |  |  | 921 |  |  |  | 53,448 |  |  |  | (1,568 | ) |  |  | 281,369 |
Revaluation of financial instruments |  |  | 8,284 |  |  |  | 28,294 |  |  |  | (34,695 | ) |  |  | 1,340 |  |  |  | - |  |  |  | 3,223 |
Tax losses (*) |  |  | 1,009,782 |  |  |  | 304,892 |  |  |  | - |  |  |  | 14,062 |  |  |  | - |  |  |  | 1,328,736 |
Intangibles |  |  | (364,314 | ) |  |  | 4,131 |  |  |  | - |  |  |  | (70,522 | ) |  |  | - |  |  |  | (430,705 | )
Others |  |  | (13,802 | ) |  |  | (30,185 | ) |  |  | - |  |  |  | 22,234 |  |  |  | 1,214 |  |  |  | (20,539 | )
Total |  |  | (434,970 | ) |  |  | (73,814 | ) |  |  | (33,774 | ) |  |  | 11,733 |  |  |  | (354 | ) |  |  | (531,179 | )
| (b) | From January 1 to December 31, 2017
|  | Opening |  |  | Recognized in |  |  | Recognized in |  |  | Exchange |  |  | Ending |
|  | balance |  |  | consolidated |  |  | comprehensive |  |  | rate |  |  | balance |
|  | Assets/(liabilities) |  |  | income |  |  | income |  |  | variation |  |  | Asset (liability) |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Depreciation |  |  | (1,376,025 | ) |  |  | 185,282 |  |  |  | - |  |  |  | 322 |  |  |  | (1,190,421 | )
Leased assets |  |  | (239,758 | ) |  |  | (138,879 | ) |  |  | - |  |  |  | 294 |  |  |  | (378,343 | )
Amortization |  |  | (77,480 | ) |  |  | 22,486 |  |  |  | - |  |  |  | 174 |  |  |  | (54,820 | )
Provisions |  |  | 281,369 |  |  |  | (286,267 | ) |  |  | (785 | ) |  |  | (4,778 | ) |  |  | (10,461 | )
Revaluation of financial instruments |  |  | 3,223 |  |  |  | 2,417 |  |  |  | (1,770 | ) |  |  | (120 | ) |  |  | 3,750 |
Tax losses (*) |  |  | 1,328,736 |  |  |  | 152,081 |  |  |  | - |  |  |  | (1,257 | ) |  |  | 1,479,560 |
Intangibles |  |  | (430,705 | ) |  |  | 24,436 |  |  |  | - |  |  |  | (267 | ) |  |  | (406,536 | )
Others |  |  | (20,539 | ) |  |  | (7,547 | ) |  |  | - |  |  |  | (319 | ) |  |  | (28,405 | )
Total |  |  | (531,179 | ) |  |  | (45,991 | ) |  |  | (2,555 | ) |  |  | (5,951 | ) |  |  | (585,676 | )
| (c) | From January 1 to December 31, 2018
|  | Opening |  |  | Recognized in |  |  | Recognized in |  |  | Exchange |  |  | Ending |
|  | balance |  |  | consolidated |  |  | comprehensive |  |  | rate |  |  | balance |
|  | Assets/(liabilities) |  |  | income |  |  | income |  |  | variation |  |  | Asset (liability) |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Depreciation |  |  | (1,190,421 | ) |  |  | 188,052 |  |  |  | - |  |  |  | 3,137 |  |  |  | (999,232 | )
Leased assets |  |  | (378,343 | ) |  |  | (207,787 | ) |  |  | - |  |  |  | 2,866 |  |  |  | (583,264 | )
Amortization |  |  | (54,820 | ) |  |  | (3,735 | ) |  |  | - |  |  |  | 1,692 |  |  |  | (56,863 | )
Provisions |  |  | (10,461 | ) |  |  | 92,804 |  |  |  | 1,567 |  |  |  | (46,582 | ) |  |  | 37,328 |
Revaluation of financial instruments |  |  | 3,750 |  |  |  | (2,326 | ) |  |  | (269 | ) |  |  | (1,168 | ) |  |  | (13 | )
Tax losses (*) |  |  | 1,479,560 |  |  |  | (98,154 | ) |  |  | - |  |  |  | (12,256 | ) |  |  | 1,369,150 |
Intangibles |  |  | (406,536 | ) |  |  | 20,000 |  |  |  | - |  |  |  | 35,298 |  |  |  | (351,238 | )
Others |  |  | (28,405 | ) |  |  | 16,853 |  |  |  | - |  |  |  | (3,110 | ) |  |  | (14,662 | )
Total |  |  | (585,676 | ) |  |  | 5,707 |  |  |  | 1,298 |  |  |  | (20,123 | ) |  |  | (598,794 | )
Deferred tax assets not recognized: |  | As of |  |  | As of |
|  | December 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
|  | ThUS$ |  |  | ThUS$ |
Tax losses |  |  | 137,761 |  |  |  | 81,155 |
Total Deferred tax assets not recognized |  |  | 137,761 |  |  |  | 81,155 |
Deferred tax assets due to negative tax results are recognized to the extent that the corresponding tax benefit is probable in the future. As a result, as of December 31, 2018, the Company no longer recognizes deferred tax assets for ThUS $ 137,761 (ThUS $ 81,155 as of December 31, 2017) with respect to losses of ThUS $ 447,150 (ThUS $ 247,920 at December 31, 2017), additionally, and after the re-evaluation of the financial and fiscal projections, it has written off during the year ThUS $ 46,492 that were no longer considered recoverable. Deferred tax expense and current income taxes:
|  | For the year ended |
|  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Current tax expense |  |  |  |  |  |  |  |  |  |  |  |
Current tax expense |  |  | 77,713 |  |  |  | 127,024 |  |  |  | 87,307 |
Adjustment to previous period’s current tax |  |  | 362 |  |  |  | 489 |  |  |  | 2,083 |
Total current tax expense, net |  |  | 78,075 |  |  |  | 127,513 |  |  |  | 89,390 |
Deferred tax expense |  |  |  |  |  |  |  |  |  |  |  |
Deferred expense for taxes related to the creation and reversal of temporary differences |  |  | 5,707 |  |  |  | 45,991 |  |  |  | 73,814 |
Total deferred tax expense, net |  |  | 5,707 |  |  |  | 45,991 |  |  |  | 73,814 |
Income tax expense |  |  | 83,782 |  |  |  | 173,504 |  |  |  | 163,204 |
Composition of income tax expense (income):
|  | For the year ended |
|  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Current tax expense, net, foreign |  |  | 65,850 |  |  |  | 100,657 |  |  |  | 80,600 |
Current tax expense, net, Chile |  |  | 12,225 |  |  |  | 26,856 |  |  |  | 8,790 |
Total current tax expense, net |  |  | 78,075 |  |  |  | 127,513 |  |  |  | 89,390 |
Deferred tax expense, net, foreign |  |  | 58,271 |  |  |  | 21,846 |  |  |  | 119,175 |
Deferred tax expense, net, Chile |  |  | (52,564 | ) |  |  | 24,145 |  |  |  | (45,361 | )
Deferred tax expense, net, total |  |  | 5,707 |  |  |  | 45,991 |  |  |  | 73,814 |
Income tax expense |  |  | 83,782 |  |  |  | 173,504 |  |  |  | 163,204 |
Profit before tax by the legal tax rate in Chile (27% and 25.5% at December 31, 2018 and 2017, respectively)
|  | For the year ended |  |  | For the year ended |
|  | December 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |  |  | % |  |  | % |  |  | % |
Tax expense using the legal rate |  |  | 80,198 |  |  |  | 95,425 |  |  |  | 65,449 |  |  |  | 27.00 |  |  |  | 25.50 |  |  |  | 24.00 |
Tax effect by change in tax rate |  |  | 5,587 |  |  |  | 897 |  |  |  | - |  |  |  | 1.88 |  |  |  | 0.24 |  |  |  | - |
Tax effect of rates in other jurisdictions |  |  | 3,287 |  |  |  | 42,326 |  |  |  | 16,333 |  |  |  | 1.11 |  |  |  | 11.31 |  |  |  | 5.99 |
Tax effect of non-taxable operating revenues |  |  | (3,076 | ) |  |  | (44,593 | ) |  |  | (62,419 | ) |  |  | (1.04 | ) |  |  | (11.92 | ) |  |  | (22.89 | )
Tax effect of disallowable expenses |  |  | 61,295 |  |  |  | 35,481 |  |  |  | 132,469 |  |  |  | 20.64 |  |  |  | 9.48 |  |  |  | 48.58 |
Tax effect of due to the non-use of tax losses |  |  | 46,492 |  |  |  | 211 |  |  |  | - |  |  |  | 15.65 |  |  |  | 0.06 |  |  |  | - |
Other increases (decreases) in legal tax charge |  |  | (110,001 | ) |  |  | 43,757 |  |  |  | 11,372 |  |  |  | (37.03 | ) |  |  | 11.69 |  |  |  | 4.17 |
Total adjustments to tax expense using the legal rate |  |  | 3,584 |  |  |  | 78,079 |  |  |  | 97,755 |  |  |  | 1.21 |  |  |  | 20.86 |  |  |  | 35.85 |
Tax expense using the effective rate |  |  | 83,782 |  |  |  | 173,504 |  |  |  | 163,204 |  |  |  | 28.21 |  |  |  | 46.36 |  |  |  | 59.85 |
Thus, at December 31, 2018 the Company presents the reconciliation of income tax expense and legal tax rate considering the rate increase. Other increases (decreases) in legal tax charges (US$ 110 millions) mainly includes the effect of the decrease in deferred tax liabilities (US$ 172.9 millions) that occurs at the anticipated end of the financing of aircraft that were in leasing with related companies outside of Chile; and other adjustments for permanent differences in the other group companies (US$ 62.9 millions). Deferred taxes related to items charged to net equity:
|  | For the year ended |
|  | December 31, |
|  | 2018 |  |  | 2017 |
|  | ThUS$ |  |  | ThUS$ |
Aggregate deferred taxation of components of other comprehensive income |  |  | 1,298 |  |  |  | (2,555 | )

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