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INCOME TAX EXPENSE AND DEFERRED TAXES | 12 Months Ended
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Dec. 31, 2019
INCOME TAX EXPENSE AND DEFERRED TAXES |
INCOME TAX EXPENSE AND DEFERRED TAXES | 10 – INCOME TAX EXPENSE AND DEFERRED TAXES 10.1 Income tax expense The current and deferred income tax expenses are detailed as follows:
Details |  | 12.31.2019 |  | 12.31.2018 |  | 12.31.2017
|  | ThCh$ |  | ThCh$ |  | ThCh$
Current income tax expense |  | 35,439,707 |  | 38,313,980 |  | 40,183,261
Current tax adjustment previous period |  | 713,992 |  | 312,403 |  | 137,455
Withholding tax expense foreign subsidiaries |  | 4,534,145 |  | 7,364,213 |  | 6,730,031
Other current tax expense (income) |  | (425,958) |  | 474,105 |  | (5,733)
Current income tax expense |  | 40,261,886 |  | 46,464,701 |  | 47,045,014
Expense (income) for the creation and reversal of temporary differences of deferred tax and others |  | 20,905,005 |  | 9,100,154 |  | 4,752,620
Expense (income) for deferred taxes |  | 20,905,005 |  | 9,100,154 |  | 4,752,620
Total income tax expense |  | 61,166,891 |  | 55,564,855 |  | 51,797,634
The distribution of national and foreign tax expenditure is as follows:
Income taxes |  | 12.31.2019 |  | 12.31.2018 |  | 12.31.2017
|  | ThCh$ |  | ThCh$ |  | ThCh$
Current taxes |  |  |  |  |  |
Foreign |  | (24,315,576) |  | (24,442,984) |  | (30,258,395)
National |  | (15,946,310) |  | (22,021,717) |  | (16,786,619)
Current tax expense |  | (40,261,886) |  | (46,464,701) |  | (47,045,014)
Deferred taxes |  |  |  |  |  |
Foreign |  | (24,012,798) |  | (9,121,332) |  | (4,667,982)
National |  | 3,107,793 |  | 21,178 |  | (84,638)
Deferred tax expense |  | (20,905,005) |  | (9,100,154) |  | (4,752,620)
Income tax expense |  | (61,166,891) |  | (55,564,855) |  | (51,797,634)
The reconciliation of the tax expense using the statutory rate with the tax expense using the effective rate is as follows:
Reconciliation of effective rate |  | 12.31.2019 |  | 12.31.2018 |  | 12.31.2017 |
|  | ThCh$ |  | ThCh$ |  | ThCh$ |
Net income before taxes |  | 236,413,116 |  | 153,015,601 |  | 170,798,359 |
Tax expense at legal rate (27.0%) |  | (63,831,541) |  | (41,314,212) |  | (43,553,581) |
Effect of a different tax rate in other jurisdictions |  | (3,471,705) |  | 967,671 |  | (4,971,103) |
Permanent differences: |  |  |  |  |  |  |
Non-taxable revenues |  | 9,507,807 |  | 12,522,541 |  | 9,645,068 |
Non-deductible expenses |  | (4,664,045) |  | (11,141,237) |  | (4,020,729) |
Reversal of tax provision |  | (3,316,278) |  | (295,632) |  | 125,021 |
Effect of monetary tax restatement Chilean companies |  | 5,199,589 |  | 2,566,163 |  | (1,465,753) |
Foreign subsidiaries tax withholding expense and other legal tax debits and credits |  | (590,718) |  | (18,870,149) |  | (7,556,557) |
Adjustments to tax expense |  | 6,136,355 |  | (15,218,314) |  | (3,272,950) |
Tax expense at effective rate |  | (61,166,891) |  | (55,564,855) |  | (51,797,634) |
Effective rate |  | 25.9 | % | 36.3 | % | 30.6 | %
The applicable income tax rates in each of the jurisdictions where the Company operates are the following:
|  | Rate |
Country |  | 2019 |  | 2018 |  | 2017 |
Chile |  | 27.0 | % | 27.0 | % | 25.5 | %
Brazil |  | 34.0 | % | 34.0 | % | 34.0 | %
Argentina |  | 30.0 | % | 30.0 | % | 35.0 | %
Paraguay |  | 10.0 | % | 10.0 | % | 10.0 | %
10.2 Deferred income taxes The net cumulative balances of temporary differences that give rise to deferred tax assets and liabilities are detailed as follows:
|  | 12.31.2019 |  | 12.31.2018
Temporary differences |  | Assets |  | Liabilities |  | Assets |  | Liabilities
|  | ThCh$ |  | ThCh$ |  | ThCh$ |  | ThCh$
Property, plant and equipment |  | 5,445,810 |  | 51,414,971 |  | 5,420,447 |  | 46,181,359
Obsolescence provision |  | 1,588,563 |  | — |  | 910,076 |  | 112,359
ICMS exclusion credit |  | — |  | 25,651,794 |  | — |  | —
Employee benefits |  | 5,418,561 |  | 12,157 |  | 5,169,161 |  | 131,829
Post-employment benefits |  | 148,853 |  | 787,576 |  | 90,941 |  | 1,014,354
Tax loss carry forwards (1) |  | 7,607,813 |  | — |  | 9,137,392 |  | —
Tax goodwill Brazil |  | 10,341,033 |  | — |  | 18,836,838 |  | —
Contingency provision |  | 34,109,458 |  | — |  | 26,796,262 |  | —
Foreign Exchange differences (2) |  | 9,284,450 |  | — |  | 13,083,953 |  | —
Allowance for doubtful accounts |  | 756,895 |  | — |  | 1,262,977 |  | —
Coca-Cola incentives (Argentina) |  | — |  | — |  | 352,061 |  | —
Assets and liabilities for placement of bonds |  | 390,163 |  | 1,187,649 |  | — |  | 1,327,727
Lease liabilities |  | 2,242,439 |  | — |  | 1,328,320 |  | —
Inventories |  | 447,192 |  | — |  | 347,470 |  | —
Distribution rights |  | — |  | 163,107,412 |  | — |  | 173,273,994
Others |  | — |  | 3,705,078 |  | — |  | 5,940,224
Subtotal |  | 77,781,230 |  | 245,866,637 |  | 82,735,898 |  | 227,981,846
Total assets and liabilities net |  | 1,364,340 |  | 169,449,747 |  | — |  | 145,245,948
| (1) |  | Tax losses mainly associated with the subsidiary Embotelladora Andina Chile S.A. In Chile tax losses have no expiration date
| (2) |  | Corresponds to deffered taxes for exchange rate differences generated on the translation of debt expressed in foreign currency in the subsidiary Rio de Janeiro Refrescos Ltda. and which for tax purposes are recognized in Brazil when incurred.
The movement in deferred income tax accounts is as follows:
Movement |  | 12.31.2019 |  | 12.31.2018 |  | 12.31.2017
|  | ThCh$ |  | ThCh$ |  | ThCh$
Opening Balance |  | 145,245,948 |  | 121,991,585 |  | 125,608,802
Increase (decrease) in deferred tax |  | 20,905,005 |  | 11,303,016 |  | (3,417,011)
Increase (decrease) due to foreign currency translation (*) |  | 1,934,454 |  | 11,951,347 |  | (200,206)
Total movements |  | 22,839,459 |  | 23,254,363 |  | (3,617,217)
Ending balance |  | 168,085,407 |  | 145,245,948 |  | 121,991,585
| (1) |  | (*) Includes IAS 29 effect, due to inflation in Argentina

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