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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

The amounts of income tax expense in the statements of operations for 2020, 2019 and 2018 are summarized as follows:


		2020			2019		2018
Current income tax expense	$		174			143		99
Deferred income tax expense (revenue)			(122	)		19		125

	$		52			162		224

Summary of Temporary Differences in Deferred Income Tax Assets and Liabilities

As of December 31, 2020 and 2019, the main temporary differences that generated the consolidated deferred income tax assets and liabilities are presented below:


		2020			2019
Deferred tax assets:
Tax loss carryforwards and other tax credits	$		777			757
Accounts payable and accrued expenses			558			458
Intangible assets, net			49			57

Total deferred tax assets, gross			1,384			1,272
Presentation offset regarding same legal entity			(644	)		(645	)

			740			627

Deferred tax liabilities:
Property, machinery and equipment and right-of-use asset, net			(1,273	)		(1,323	)
Investments and other assets			(29	)		(42	)

Total deferred tax liabilities, gross			(1,302	)		(1,365	)
Presentation offset regarding same legal entity			644			645

Total deferred tax liabilities, net in the statement of financial position			(658	)		(720	)

Net deferred tax assets (liabilities)	$		82			(93	)

Out of which:
Net deferred tax liability in Mexican entities 1	$		(77	)		(157	)
Net deferred tax asset in Foreign entities 2			159			64

Net deferred tax asset (liability)	$		82			(93	)

Net deferred tax liabilities in Mexico mainly refer to a temporary difference resulting when comparing at the reporting date the carrying amount of property, machinery and equipment, as per IFRS, and their corresponding tax values (remaining

tax-deductible

amount), partially offset by certain deferred tax assets from tax loss carryforwards that are expected to be recovered in the future against taxable income. When the book value is greater than the related tax value results in a deferred tax liability. In 2011, upon transition to IFRS, CEMEX elected to measure its fixed assets at fair value, which resulted in a significant increase in book value, mainly associated with the revaluation of mineral reserves. Such restated amounts are depleted to the income statement in a period over 35 years, generating accounting expense that is not

tax-deductible;

hence the temporary difference will gradually reverse over time but does not represent a payment obligation to the tax authority at the reporting date.

2	Net deferred tax assets in foreign entities in 2020 and 2019 are mainly related to tax loss carryforwards recognized in prior years, mainly in the United States, that are expected to be recovered in the future against taxable income.

Summary of the Balances of the Deferred tax Assets and Liabilities in Statement of Financial Position

As of December 31, 2020 and 2019, balances of the deferred tax assets and liabilities included in the statement of financial position are located in the following entities:


		2020									2019
		Assets		Liabilities			Net				Assets		Liabilities			Net
Mexican entities	$		152		(229	)		(77	)	$		189		(346	)		(157	)
Foreign entities			588		(429	)		159				438		(374	)		64

	$		740		(658	)		82		$		627		(720	)		(93	)

Summary of Breakdown of Changes in Consolidated Deferred Income Taxes

The breakdown of changes in consolidated deferred income taxes during 2020, 2019 and 2018 was as follows:


		2020			2019			2018
Deferred income tax expense (revenue) in the income statement	$		(122	)		19			125
Deferred income tax revenue in stockholders’ equity 1			(41	)		(59	)		(10	)
Reclassifications 2			(12	)		3			3

Change in deferred income tax during the period	$		(175	)		(37	)		118

1	In 2018, includes a deferred income tax revenue of $8 in connection with the adoption of IFRS 9 on January 1, 2018.

2	In 2020, 2019 and 2018, refers to the effects of the reclassification of balances to assets held for sale and related liabilities (note 5.2).

Summary of Current and Deferred Income Tax Relative to Items of Other Comprehensive Income Loss

Current and/or deferred income tax relative to items of other comprehensive income during 2020, 2019 and 2018 were as follows:


		2020			2019			2018
Revenue related to foreign exchange fluctuations from intercompany balances (note 21.2)	$		(19	)		(19	)		(2	)
Expense (revenue) associated to actuarial results (note 21.2)			(41	)		(29	)		31
Revenue related to derivative financial instruments (note 17.4)			14			(34	)		(3	)
Expense (revenue) from foreign currency translation and other effects			(14	)		4			(38	)

	$		(60	)		(78	)		(12	)

Schedule of Consolidated Tax Loss and Tax Credits Carry Forwards Expire

As of December 31, 2020, consolidated tax loss and tax credits carryforwards expire as follows:


		Amount of carryforwards		Amount of unrecognized carryforwards		Amount of recognized carryforwards
2021	$		93		81		12
2022			312		289		23
2023			475		454		21
2024			524		234		290
2025 and thereafter			14,897		12,078		2,819

	$		16,301		13,136		3,165

Schedule of Effective Tax Rate Table

For the years ended December 31, 2020, 2019 and 2018, the effective consolidated income tax rates were as follows:


		2020			2019			2018
Earnings before income tax	$		(1,274	)		253			717
Income tax expense			(52	)		(162	)		(224	)

Effective consolidated income tax expense rate 1			(4.1	)%		64.0	%		31.2	%

1	The average effective tax rate equals the net amount of income tax revenue or expense divided by income or loss before income taxes, as these line items are reported in the income statement.

Schedule of Reconciliation Between Actual Income Tax Expense and Amount Computed by Applying Statutory Tax Rate

Differences between the financial reporting and the corresponding tax basis of assets and liabilities and the different income tax rates and laws applicable to CEMEX, among other factors, give rise to permanent differences between the statutory tax rate applicable in Mexico, and the effective tax rate presented in the consolidated statements of operations, which in 2020, 2019 and 2018 were as follows:


	2020						2019						2018
	%			$			%			$			%			$
Mexican statutory tax rate		30.0			(382	)		30.0			76			30.0			215
Difference between accounting and tax expenses, net 1		(19.0	)		242			109.2			277			18.7			134
Non-taxable sale of equity securities and fixed assets		1.3			(17	)		(13.4	)		(34	)		(4.6	)		(33	)
Difference between book and tax inflation		(7.1	)		90			38.1			96			19.5			140
Differences in the income tax rates in the countries where CEMEX operates 2		(0.9	)		12			(31.9	)		(81	)		(16.0	)		(115	)
Changes in deferred tax assets 3		(9.6	)		122			(59.8	)		(151	)		(15.6	)		(112	)
Changes in provisions for uncertain tax positions		0.2			(2	)		(5.2	)		(13	)		(1.8	)		(13	)
Others		1.0			(13	)		(3.0	)		(8	)		1.0			8

Effective consolidated income tax expense rate		(4.1	)		52			64.0			162			31.2			224

1	In 2020, includes $312 related to the effects of the impairment charges which are basically non-deductible (note 6). In 2019, includes $117 of difference between book and tax foreign exchange fluctuations of the Parent Company.

Refers mainly to the effects of the differences between the statutory income tax rate in Mexico of 30% against the applicable income tax rates of each country where CEMEX operates. In 2018, includes the effect related to the change in statutory tax rate in Colombia and the United States, respectively (note 20.4).

3	Refers to the effects in the effective income tax rate associated with changes during the period in the amount of deferred income tax assets related to CEMEX’s tax loss carryforwards.

Schedule of Variations Between the Line Item Changes in Deferred Tax Assets Against the Changes in Deferred Tax Assets in the Balance Sheet

The following table compares variations between the line item “Changes in deferred tax assets” as presented in the table above against the changes in deferred tax assets in the statement of financial position for the years ended December 31, 2020 and 2019:


		2020						2019
		Changes in the statement of financial position			Amounts in reconciliation			Changes in the statement of financial position			Amounts in reconciliation
Tax loss carryforwards generated and not recognized during the year	$		—			178			—			84
Derecognition related to tax loss carryforwards recognized in prior years			(70	)		12			(43	)		(43	)
Recognition related to unrecognized tax loss carryforwards			82			(84	)		92			92
Foreign currency translation and other effects			8			16			6			18

Changes in deferred tax assets		$	20			122			55			151

Schedule of Unrecognized Tax Benefits

A summary of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018, excluding interest and penalties, is as follows:


		2020			2019			2018
Balance of tax positions at beginning of the period	$		28			44			80
Adoption effects of IFRIC 23 credited to retained earnings (note 3.1)			—			(6	)		—
Additions for tax positions of prior periods			—			—			1
Additions for tax positions of current period			3			4			6
Reductions for tax positions related to prior periods and other items			(1	)		(13	)		(2	)
Settlements and reclassifications			(3	)		–			(7	)
Expiration of the statute of limitations			(2	)		(2	)		(32	)
Foreign currency translation effects			2			1			(2	)

Balance of tax positions at end of the period	$		27			28			44