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INCOME TAX AND DEFERRED TAX | 12 Months Ended
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Dec. 31, 2021
INCOME TAX AND DEFERRED TAX [Abstract] |
INCOME TAX AND DEFERRED TAX |
14. | INCOME TAX AND DEFERRED TAX
Tax Reform The Tax Reform sanctioned in Argentina in 2017, with some amendments introduced in December 2018 after the issuance of Law No. 27,468, brought with it a series of modifications in the taxation and calculation of the income tax to which the Company is subject in the normal course of its activities. Subsequently, on the occasion of the enactment of the Solidarity Law, new modifications were introduced with impact as of the fiscal year beginning on January 1, 2019. The main changes are the following: Applicable rate Until the fiscal year ended on December 31, 2017, the income tax rate remained at 35%. The tax reform establishes a gradual reduction of the applicable rate for the calculation of income tax, being 30% and 25% for fiscal periods beginning on January 1, 2018 and 2019 and January 1, 2020 onwards, respectively. The reduction in the applicable rate is complemented by the application of a tax on the distribution of dividends made to human persons and foreign beneficiaries, which the Company must withhold and enter the Tax authority as a single and definitive payment when the dividends are paid. This additional tax will be 7% or 13%, depending on whether the dividends distributed correspond to earnings of a fiscal period in which the Company was reached at the rate of 30% or 25%, respectively. For these purposes it is considered, without admitting proof to the contrary, that the dividends that are made available correspond, firstly, to the oldest accumulated earnings. Solidarity Law suspended until fiscal years starting from 1st January 2021 inclusive, reduced to 25% of the applicable rate and retention of 13% on dividends. On June 16, 2021, “Law No. 27,630: Amending the Income Tax Law” was published in the Official Gazette which, among other issues, introduces a modification in the income tax rate effective for fiscal years or fiscal years beginning on or after January 1, 2021. The amendment establishes a tiered system of rates in three segments according to the level of accumulated net taxable income: a first step of 25% for accumulated net income up to $ 5 million pesos; the second step of 30% for accumulated net income between $ 5 and $ 50 million pesos; and a last segment of 35% for accumulated net income over $ 50 million pesos. The amount of accumulated net profits will be adjusted annually, starting January 1, 2022, considering the annual variation of the CPI provided by INDEC. Likewise, dividends distributed to foreign individuals and beneficiaries will be taxed at a rate of 7%. For the determination of the deferred and current income tax charge as of December 31, 2021, the Company has applied the progressive tax rate in force as mentioned above. Previously, the current rate, as provided by Law No. 27,430, was 30% for fiscal years beginning on or after January 1, 2018 and 25% for fiscal years beginning on or after 2022. Tax adjustment for inflation Law No. 27,468 establishes that in the net taxable income of the periods beginning on or after January 1, 2018, the adjustment for inflation obtained by the application of the income tax law may be deducted or incorporated into the tax result for the fiscal year. This adjustment will proceed only if the percentage variation in the IPC, will accumulate (a) a percentage higher than 100% in the 36 months prior to the end of the year, or (b) regarding the first, second and third fiscal year that starts from its effective date, an accumulated variation of the IPC that exceeds 55%, 30% or 15% of said 100%, respectively. For the fiscal year ended December 31, 2021, the CPI has exceeded the 100% threshold mentioned above, so the Company has measured the tax charge to earnings for the year ended December 31, 2021 considering the application of the adjustment for fiscal inflation. According to the Solidarity Law, the positive or negative result generated by the application of the inflation adjustment corresponding to the first and second fiscal year beginning on January 1, 2019 will be charged in a sixth in that fiscal period and the five sixths remaining in equal parts in the following 5 fiscal periods. As of January 1, 2021, 100% of the adjustment may be deducted/taxed in the year in which the effect is determined. Adjustment of acquisitions and investments made in fiscal years beginning on or after January 1, 2018 A cost adjustment mechanism is established for assets acquired or investments made in fiscal years beginning on or after January 1, 2018. The adjustment will be made based on the percentage variations of the IPIM. Tax revaluation It established the possibility of carrying out a tax revaluation, for a single time, of certain assets that are part of the assets as of December 31, 2017, in order to adjust their value. This revaluation was optional, and to carry out the tax revaluation, a special tax must be paid. The special tax varied between 8% and 15%, depending on the type of asset to be re-evaluated between the difference of the residual revalued tax value and the residual tax value of origin. Once the option for a certain good is exercised, all other goods in the same category must be revalued. This tax is not deductible from income tax, and the asset increase that originates the revaluation is neither taxable for income tax nor taxable for the purposes of the TOMPI liquidation. The taxpayers that exercised the revaluation option has waived to promote any judicial or administrative process for which the adjustment for tax inflation is claimed. The Board of Directors decided to make use of this option. Deferred Tax The reconciliation between the charge computed for tax purposes and the income tax expense charged to the statement of comprehensive income in the years ended December 31, 2021, 2020 and 2019 is as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current income tax |  |  | (13,703,822 | ) |  |  | (5,191,703 | ) |  |  | (5,511,856 | )
Deferred income tax |  |  | 966,801 |  |  |  | (1,456,405 | ) |  |  | (2,757,610) |
Total income tax |  |  | (12,737,021 | ) |  |  | (6,648,108 | ) |  |  | (8,269,466 | )
The analysis of the net deferred tax assets and liabilities is as follows:
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |
Deferred tax assets to be recovered after more than 12 months |  |  | 4,027,923 |  |  |  | 1,887,237 |
Deferred tax assets to be recovered after less than 12 months |  |  | 640,585 |  |  |  | 562,048 |
Subtotal deferred tax assets |  |  | 4,668,508 |  |  |  | 2,449,285 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Deferred tax liabilities to be recovered after more than 12 months |  |  | (14,778,469 | ) |  |  | (13,325,708 | )
Deferred tax liabilities to be recovered after less than 12 months |  |  | (166,265 | ) |  |  | (366,604 | )
Subtotal deferred tax liabilities |  |  | (14,944,734 | ) |  |  | (13,692,312 | )
Deferred tax liabilities, net |  |  | (10,276,226 | ) |  |  | (11,243,027 | )
As of December 31, 2021 and 2020, Ps. 23,757 and Ps. 37,240 were recognized as Deferred tax asset, respectively. The components of the net deferred tax assets and liabilities as of December 31, 2021, 2020 and 2019 are the following:
Deferred tax assets |  | Other receivables |  |  | Allowance for doubtful accounts |  |  | Tax credits discounted value loss |  |  | Account receivables discounted value |  |  | Provisions for legal claims and other provisions |  |  | Financial lease |  |  | Contract liabilities |  |  | Tax loss carryforward |  |  | Tax inflation adjustment |  |  | Total |
As of December 31, 2019 |  |  | - |  |  |  | 1,502 |  |  |  | 731 |  |  |  | 1,502 |  |  |  | 318,208 |  |  |  | 1,233,512 |  |  |  | 1,035,863 |  |  |  | - |  |  |  | 18,143 |  |  |  | 2,609,461 |
Charge in results |  |  | 20,403 |  |  |  | (1,502 | ) |  |  | (731 | ) |  |  | (531 | ) |  |  | 18,596 |  |  |  | (134,460 | ) |  |  | (70,496 | ) |  |  | 1,425 |  |  |  | 7,120 |  |  |  | (160,176 | )
As of December 31, 2020 |  |  | 20,403 |  |  |  | - |  |  |  | - |  |  |  | 971 |  |  |  | 336,804 |  |  |  | 1,099,052 |  |  |  | 965,367 |  |  |  | 1,425 |  |  |  | 25,263 |  |  |  | 2,449,285 |
Charge in results |  |  | (20,403 | ) |  |  | - |  |  |  | - |  |  |  | (59 | ) |  |  | 180,659 |  |  |  | (68,294 | ) |  |  | 446,215 |  |  |  | 1,691,364 |  |  |  | (10,259 | ) |  |  | 2,219,223 |
As of December 31, 2021 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 912 |  |  |  | 517,463 |  |  |  | 1,030,758 |  |  |  | 1,411,582 |  |  |  | 1,692,789 |  |  |  | 15,004 |  |  |  | 4,668,508 |
Deferred tax liabilities |  | Other receivables |  |  | Loans |  |  | Property, Plant and Equipment |  |  | Cash and cash equivalents |  |  | Inventories |  |  | Other financial assets at amortized cost |  |  | Tax inflation adjustment |  |  | Other liabilities |  |  | Total |
As of December 31, 2019 |  |  | - |  |  |  | (53,975 | ) |  |  | (8,937,061 | ) |  |  | (4,373 | ) |  |  | (41,376 | ) |  |  | (3,831 | ) |  |  | (3,355,467 | ) |  |  | - |  |  |  | (12,396,083 | )
Charge in results |  |  | - |  |  |  | 23,871 |  |  |  | 1,047,066 |  |  |  | 2,809 |  |  |  | (9,226 | ) |  |  | (300,383 | ) |  |  | (2,060,366 | ) |  |  | - |  |  |  | (1,296,229 | )
As of December 31, 2020 |  |  | - |  |  |  | (30,104 | ) |  |  | (7,889,995 | ) |  |  | (1,564 | ) |  |  | (50,602 | ) |  |  | (304,214 | ) |  |  | (5,415,833 | ) |  |  | - |  |  |  | (13,692,312 | )
Charge in results |  |  | (2,683 | ) |  |  | (53,786 | ) |  |  | (3,098,657 | ) |  |  | (15,694 | ) |  |  | (14,515 | ) |  |  | 304,214 |  |  |  | 1,758,221 |  |  |  | (129,522 | ) |  |  | (1,122,900 | )
As of December 31, 2021 |  |  | (2,683 | ) |  |  | (83,890 | ) |  |  | (10,988,652 | ) |  |  | (17,258 | ) |  |  | (65,117 | ) |  |  | - |  |  |  | (3,657,612 | ) |  |  | (129,522 | ) |  |  | (14,944,734 | )
As of December 31, 2021, the Company maintain a specific tax loss derived from negative exchange differences for fiscal year 2021 generated by financial instruments traded abroad for Ps. 1,880,049. The realization of such tax loss depends on the future generation of taxable financial gains during the statute of limitations period. In order to determine its recoverability, the Company takes into consideration the reversal of deferred items, its tax planning and projections of future specific taxable income based on its best estimate. Based on these projections and because it cannot be estimated as probable the generation of future specific financial gains to absorb such tax loss, no deferred tax asset of Ps. 187,260 was recognized as of December 31, 2021. Income tax expense computed at the statutory tax rate on pre-tax income differs from the income tax expense for the years ended December 31, 2021, 2020 and 2019 as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
Pre tax income |  |  | 33,668,098 |  |  |  | 11,608,351 |  |  |  | 34,583,065 |
Statutory income tax rate |  |  | 35 | % |  |  | 30 | % |  |  | 30 | %
Pre tax income at statutory income tax rate |  |  | (11,783,834 | ) |  |  | (3,482,505 | ) |  |  | (10,374,920 | )
Tax effects due to: |  |  |  |  |  |  |  |  |  |  |  |
- Restatement by inflation |  |  | 5,788,975 |  |  |  | 3,162,319 |  |  |  | 4,191,239 |
- Unrecognized tax loss carryforward |  |  | 1,692,789 |  |  |  | (3,074,046 | ) |  |  | - |
- Adjustment affidavit previous year |  |  | (67,587 | ) |  |  | (13,695 | ) |  |  | 280,788 |
- Variation of tax rate |  |  | (4,083,828 | ) |  |  | - |  |  |  | - |
- Tax inflation adjustment |  |  | (3,941,738 | ) |  |  | (4,188,721 | ) |  |  | (4,106,748 | )
- Others |  |  | (341,798 | ) |  |  | 948,540 |  |  |  | 1,740,174 |
Total income tax |  |  | (12,737,021 | ) |  |  | (6,648,108 | ) |  |  | (8,269,466 | )

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