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Current and Deferred Taxes

12 Months Ended

Dec. 31, 2022

Current and Deferred Taxes [Abstract]

NOTE 13 - CURRENT AND DEFERRED TAXES

Current taxes

As of December 31, 2022 and 2021, the Bank recognises taxes payable (recoverable), which is determined based on the currently applicable tax legislation. This amount is recorded net of recoverable taxes, and is shown as follows:

	As of December 31,
	2022			2021
	MCh$			MCh$

Summary of current tax liabilities (assets)
Current tax (assets)		(36,514	)		(121,534	)
Current tax liabilities		148,680			-

Total tax payable (recoverable)		112,166			(121,534	)

(Assets) liabilities current taxes detail (net)
Income tax, tax rate		147,668			4,434
Minus:
Provisional monthly payments		(33,021	)		(138,515	)
Credit for training expenses		(2,039	)		(2,110	)
Grant credits		(1,160	)		-
Other		718			14,657
Total tax payable (recoverable)		112,166			(121,534	)

Effect on income

The effect of income tax expense on income for the years ended December 31, 2022, 2021 and 2020 is comprised of the following items:

	As of December 31,
	2022			2021			2020
	MCh$			MCh$			MCh$
Income tax expense
Current tax		139,961			4,434			174,205

Credits (debits) for deferred taxes
Origination and reversal of temporary differences		(52,181	)		226,810			(28,465	)
Valuation provision					-			-
Subtotals		87,780			231,244			145,740
Tax for rejected expenses (Article No21)		236			210			1,354
Other		5,608			(9,790	)		(4,561	)
Net charges for income tax expense		93,624			221,664			142,533

Effective tax rate reconciliation

The reconciliation between the income tax rate and the effective rate applied in determining tax expenses as of December 31, 2022, 2021 and 2020, is as follows:

	For the year ended,
	2022						2021						2020
	Tax rate			Amount			Tax rate			Amount			Tax rate			Amount
	%			MCh$			%			MCh$			%			MCh$

Tax calculated over profit before tax		27.00			238,415			27.00			290,005			27.00			187,721
Price level restatement for tax purposes ⁽¹⁾		(18.70	)		(165,164	)		(7.56	)		(81,235	)		(6.15	)		(42,730	)
Single penalty tax (rejected expenses)		0.03			236			(0.01	)		210			0.19			1,354
Other		2.28			20,137			0.00			12,684			(0.55	)		(3,812	)
Effective tax rates and expenses for income tax		10.61			93,624			19.43			221,664			20.50			142,533

(1)

Mainly corresponds to the permanent differences originated from the Tax Capital Monetary Correction and the effect of the bonds received under article 104 of the Tax Law.

Effect of deferred taxes on comprehensive income

Below is a summary of the separate effect of deferred tax on other comprehensive income, showing the asset and liability balances, for the years ended December 31, 2022 and 2021:

	As of December 31,
	2022			2021
	MCh$			MCh$
Deferred tax assets
Debt instruments at FVOCI		76,512			33,489
Cash flow hedges		35,689			100,867
Total deferred tax assets recognised through other comprehensive income		112,201			134,356

Deferred tax liabilities
Debt instruments at FVOCI		(46,976	)		(1,839	)
Cash flow hedges		(3,603	)		-
Total deferred tax liabilities recognised through other comprehensive income		(50,579	)		(1,839	)

Net deferred tax balances in equity		61,622			132,517

Deferred taxes in equity attributable to shareholders of the Bank		61,821			132,724
Deferred tax in equity attributable to non-controlling interests		(199	)		(207	)

Effect of deferred taxes on income

As of December 31, 2022 and 2021, the Bank has recorded effects for deferred taxes in the financial statements:

	As of December 31,
	2022		2021
	MCh$		MCh$
Deferred tax assets
Interests and adjustments		17,670		9,815
Extraordinary charge-offs		29,613		12,687
Assets received in lieu of payment		1,223		2,843
Exchange rate adjustments		-		16,611
Property, plant and equipment valuation		4,708		1,545
Allowance for loan losses		276,364		329,028
Provision for expenses		88,372		83,174
Derivatives		50		-
Leased assets		95,152		107,564
Subsidiaries tax losses		5,570		12,757
Right of use assets		887		516
Others		9,444		-
Total deferred tax assets		529,053		576,540

Deferred tax liabilities
Valuation of investments		423		151,062
Fixed assets valuation		-		2,001
Prepaid expenses		7,285		18,895
Valuation provision		3,147		8,228
Derivatives		289,352		245,517
Exchange rate adjustments		8,779		-
Other		17,162		113
Total deferred tax liabilities		326,148		425,816

Summary of deferred tax assets and liabilities

Below is a summary of the deferred taxes impact on equity and income:

	As of December 31,
	2022		2021
	MCh$		MCh$
Deferred tax assets
Recognised through other comprehensive income		112,201		134,356
Recognised through profit or loss		529,053		576,540
Total deferred tax assets		641,254		710,896

Deferred tax liabilities
Recognised through other comprehensive income		50,579		1,839
Recognised through profit or loss		326,148		425,816
Total deferred tax liabilities		376,727		427,655