XML 42 R28.htm IDEA: XBRL DOCUMENT
v3.7.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2016
INCOME TAXES |
INCOME TAXES | 20. INCOME TAXES The provision for income taxes is comprised of the following:
|  | Years Ended December 31, |
|  | 2014 |  | 2015 |  | 2016 |
|  | $ |  | $ |  | $ |
Income before income taxes |  |  |  |  |  |  |  |  |  |
Canada |  |  | 248,666 |  |  | 79,631 |  |  | 57,922 |
United States |  |  | 12,009 |  |  | (14,183 | ) |  | (74,002 | )
PRC |  |  | 50,746 |  |  | 134,330 |  |  | 133,847 |
Others |  |  | 9,897 |  |  | 23,050 |  |  | (34,516 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 321,318 |  |  | 222,828 |  |  | 83,251 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current tax |  |  |  |  |  |  |  |  |  |
Canada |  |  | 17,721 |  |  | 71,002 |  |  | 610 |
United States |  |  | 18,702 |  |  | 40,567 |  |  | 96,172 |
PRC |  |  | 7,559 |  |  | 20,145 |  |  | 29,339 |
Others |  |  | 2,757 |  |  | 6,639 |  |  | (6,246 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 46,739 |  |  | 138,353 |  |  | 119,875 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax |  |  |  |  |  |  |  |  |  |
Canada |  |  | 40,895 |  |  | (44,548 | ) |  | 6,366 |
United States |  |  | (14,928 | ) |  | (45,024 | ) |  | (74,562 | )
PRC |  |  | 10,827 |  |  | 7,506 |  |  | (10,880 | )
Others |  |  | (6,102 | ) |  | (6,775 | ) |  | (22,823 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 30,692 |  |  | (88,841 | ) |  | (101,899 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total income tax expense |  |  |  |  |  |  |  |  |  |
Canada |  |  | 58,616 |  |  | 26,454 |  |  | 6,976 |
United States |  |  | 3,774 |  |  | (4,457 | ) |  | 21,610 |
PRC |  |  | 18,386 |  |  | 27,651 |  |  | 18,459 |
Others |  |  | (3,345 | ) |  | (136 | ) |  | (29,069 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 77,431 |  |  | 49,512 |  |  | 17,976 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The Company mainly operates in Canada, PRC, Japan, Germany, the United States, Hong Kong and Vietnam. Canada The Company was incorporated in Ontario, Canada and is subject to both federal and Ontario provincial corporate income taxes at a rate of 26.5% for the years ended December 31, 2014, 2015 and 2016. Canadian Solar Solutions Inc. was incorporated in Ontario, Canada and is subject to both federal and Ontario provincial corporate income taxes at a rate of 25% for all years ended December 31, 2014, 2015 and 2016. United States Canadian Solar (USA) Inc. was incorporated in Delaware, USA and is subject to federal, California, and other states' corporate income taxes at a rate of 37.95%, 38.56% and 37.69% for the years ended December 31, 2014, 2015 and 2016, respectively. Canadian Solar Energy Acquisition Co. was incorporated in Delaware, USA on January 22, 2015 and is subject to federal, California, and other states' corporate income taxes at a rate of 44.84% and 43.63% for the years ended December 31, 2015 and 2016, respectively. Japan Canadian Solar Japan K.K. was incorporated in Japan and is subject to Japanese corporate income taxes at a normal statutory rate of approximately 35.64%, 35.64% and 35.15% for the years ended December 31, 2014, 2015 and 2016, respectively. Germany Canadian Solar EMEA GmbH was incorporated in Munich, Germany and is subject to German corporate income tax at a rate of approximately 33% for the years ended December 31, 2014, 2015 and 2016, respectively. Vietnam Canadian Solar Manufacturing Vietnam Co., Ltd was incorporated in Vietnam in June 25, 2015 and is subject to Vietnamese corporate income taxes at a normal statutory rate of 10% for the years ended December 31, 2015 and 2016, respectively. 2016 is the first profitable year, hence it enjoys tax exemption from 2016 to 2019 and reduced statutory rate of 5% from 2020 to 2028. Hong Kong Canadian Solar International Ltd. was incorporated in Hong Kong, China, and is subject to Hong Kong profits tax at a rate of 16.5% for the years ended December 31, 2014, 2015 and 2016, respectively. PRC The other major operating subsidiaries, including CSI Solartronics (Changshu) Co., Ltd., CSI Solar Technologies Inc., CSI Cells Co., Ltd., Canadian Solar Manufacturing (Luoyang) Inc., CSI Solar Power Group Co., Ltd. (formerly "CSI Solar Power (China) Inc.") and Canadian Solar Manufacturing (Changshu) Inc., and Suzhou Sanysolar Materials Technology Co., Ltd. were governed by the PRC Enterprise Income Tax Law ("EIT Law"). CSI Solartronics (Changshu) Co., Ltd., CSI Solar Technologies Inc., CSI Cells Co., Ltd., Canadian Solar Manufacturing (Luoyang) Inc., Canadian Solar Manufacturing (Changshu) Inc., CSI Solar Power Group Co., Ltd. (formerly "CSI Solar Power (China) Inc.") are all subject to the enterprise income tax rate of 25% for the years ended December 31, 2014, 2015 and 2016. Suzhou Sanysolar Materials Technology Co., Ltd. is subject to the enterprise income tax rate of 15% resulting from its High and New Technology Enterprise status for the years ended December 31, 2014, 2015 and 2016. The Company makes an assessment of the level of authority for each of its uncertain tax positions (including the potential application of interest and penalties) based on their technical merits, and has measured the unrecognized benefits associated with such tax positions. This liability is recorded as liability for uncertain tax positions in the consolidated balance sheets. In accordance with its policies, the Company accrues and classifies interest and penalties associated with such unrecognized tax benefits as a component of its income tax provision. The amount of interest and penalties accrued as of December 31, 2015 and 2016 was $4,978 and $2,747, respectively. The Company does not anticipate any significant changes to its liability for unrecognized tax positions within the next 12 months. The following table illustrates the movement and balance of the Company's liability for uncertain tax positions (excluding interest and penalties) for the years ended December 31, 2014, 2015 and 2016, respectively.
|  | Years Ended December 31, |
|  | 2014 |  | 2015 |  | 2016 |
|  | $ |  | $ |  | $ |
Beginning balance |  |  | 13,001 |  |  | 10,844 |  |  | 9,490 |
Addition for tax positions related to the current year |  |  | — |  |  | 196 |  |  | 1,376 |
Reductions for tax positions from prior years/Statute of limitations expirations |  |  | (1,368 | ) |  | — |  |  | (5,436 | )
Foreign exchange effect |  |  | (789 | ) |  | (1550 | ) |  | 254 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Ending balance |  |  | 10,844 |  |  | 9,490 |  |  | 5,684 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The Company is subject to taxation in various jurisdictions where it operates, mainly including Canada, China and the United States. Generally, the Company's taxation years from 2009 to 2016 are open for reassessment to the Canadian tax authorities. The Company's taxation years from 2006 through 2016 are subject to examination by the Chinese tax authorities due to its permanent establishment in China. The Company is subject to taxation in the United States and various state jurisdictions. We are not currently under examination by the federal or state tax authorities. The Company's income tax returns for 2012 through 2016 remain open to examination by the US tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income taxes has resulted from the computational errors of the taxpayer. The statute of limitations could be extended to five years under special circumstances. Though not being clearly defined, a special circumstance would suffice where any underpayment of income taxes exceeds RMB100. For income tax adjustments relating to transfer pricing matters, the statute of limitations is ten years. Therefore, the Company's Chinese subsidiaries might be subject to reexamination by the Chinese tax authorities on non-transfer pricing matters for taxation years up to 2011 retrospectively, and on transfer pricing matters for taxation years up to 2006 retrospectively. There is no statute of limitations in case of tax evasion in China. The components of the deferred tax assets and liabilities are presented as follows:
|  | At December 31, 2015 |  | At December 31, 2016 |
|  | $ |  | $ |
Deferred tax assets: |  |  |  |  |  |  |
Accrued warranty costs |  |  | 25,548 |  |  | 23,228 |
Bad debt allowance |  |  | 8,358 |  |  | 8,058 |
Investment in affiliates under tax equity transactions |  |  | — |  |  | 54,187 |
Inventory write-down |  |  | 4,239 |  |  | 4,564 |
Future deductible expenses |  |  | 13,878 |  |  | 13,321 |
Depreciation and impairment difference of property, plant and equipment and solar power systems |  |  | 34,248 |  |  | 29,668 |
Accrued liabilities related to countervailing and anti-dumping duty deposits |  |  | 55,115 |  |  | 111,021 |
Deferred tax assets relating to sales of solar power systems |  |  | 32,159 |  |  | 996 |
Net operating losses carry-forward |  |  | 70,637 |  |  | 48,678 |
Others |  |  | 8,532 |  |  | 7,728 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax assets, gross |  |  | 252,714 |  |  | 301,449 |
Valuation allowance |  |  | (55,959 | ) |  | (71,469 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax assets, net of valuation allowance |  |  | 196,755 |  |  | 229,980 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: |  |  |  |  |  |  |
Derivative assets |  |  | 4,558 |  |  | 3,315 |
Depreciation difference of property, plant and equipment |  |  | 8,327 |  |  | 468 |
Deferred profit of projects |  |  | 40,793 |  |  | — |
Insurance recoverable |  |  | 15,000 |  |  | 16,727 |
Basis difference related to acquisitions |  |  | 18,339 |  |  | — |
Others |  |  | 3,047 |  |  | 2,838 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax liabilities |  |  | 90,064 |  |  | 23,348 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  |  | 106,691 |  |  | 206,632 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Analysis as: |  |  |  |  |  |  |
Current deferred tax assets |  |  | 30,013 |  |  | — |
Non-current deferred tax assets |  |  | 97,134 |  |  | 229,980 |
Current deferred tax liabilities |  |  | (1,426 | ) |  | — |
Non-current deferred tax liabilities |  |  | (19,030 | ) |  | (23,348 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  |  | 106,691 |  |  | 206,632 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Movement of the valuation allowance is as follows:
|  | Years Ended December 31, |
|  | 2014 |  | 2015 |  | 2016 |
|  | $ |  | $ |  | $ |
Beginning balance |  |  | 57,190 |  |  | 52,985 |  |  | 55,959 |
Additions (Reversals) |  |  | (4,411 | ) |  | (944 | ) |  | 14,486 |
Addition from acquisition of Recurrent |  |  | — |  |  | 4,949 |  |  | — |
Foreign exchange effect |  |  | 206 |  |  | (1,031 | ) |  | 1,024 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Ending balance |  |  | 52,985 |  |  | 55,959 |  |  | 71,469 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As of December 31, 2016, the Company has accumulated net operating losses of $273,840, of which $137,065 will expire between 2017 and 2036, and the remaining can be carried forward indefinitely. The Company considers positive and negative evidences to determine whether some portion or all of the deferred tax assets will not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry-forward periods, the Company's experience with tax attributes expiring unused and tax planning alternatives. The Company has considered the following possible sources of taxable income when assessing the realization of deferred tax assets:
| • | Tax planning strategies;
| • | Future reversals of existing taxable temporary differences;
| • | Further taxable income exclusive of reversing temporary differences and carry-forwards;
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible for tax purposes. As a result, the Company has recognized a valuation allowance of $55,959 and $71,469 as at December 31, 2015 and 2016, respectively. Reconciliation between the provision for income tax computed by applying Canadian federal and provincial statutory tax rates to income before income taxes and the actual provision and benefit for income taxes is as follows:
|  | Years Ended December 31, |
|  | 2014 |  | 2015 |  | 2016 |
Combined federal and provincial income tax rate |  |  | 27 | % |  | 27 | % |  | 27 | %
Effect of permanent difference |  |  | — |  |  | 1 | % |  | (16 | )%
Effect of different tax rate on earnings in other jurisdictions |  |  | (2 | )% |  | (3 | )% |  | (18 | )%
Effect of tax holiday |  |  | — |  |  | — |  |  | (4 | )%
Unrecognized tax provision |  |  | — |  |  | — |  |  | 4 | %
Change in valuation allowance |  |  | (1 | )% |  | — |  |  | 32 | %
Effect of tax credit |  |  | — |  |  | — |  |  | (7 | )%
Effect of true-up |  |  | — |  |  | (1 | )% |  | 4 | %
Foreign exchange effect |  |  | — |  |  | (2 | )% |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 24 | % |  | 22 | % |  | 22 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises in PRC earned after January 1, 2008, are subject to a 10% withholding income tax. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary difference attributable to excess of financial reporting basis over tax basis in the investment in a foreign subsidiary. However, a deferred tax liability is not recognized if the basis difference is not expected to reverse in the foreseeable future and is expected to be permanent in duration. As of December 31, 2016, all of the undistributed earnings of approximately $284.3 million attributable to the Company's PRC subsidiaries and affiliates are considered to be permanently reinvested, and no provision for PRC withholding income tax on dividend has been made thereon accordingly. Upon distribution of those earnings generated after January 1, 2008, in the form of dividends or otherwise, the Company would be subject to the then applicable PRC tax laws and regulations. Distributions of earnings generated before January 1, 2008 are exempt from PRC dividend withholding tax. The amounts of unrecognized deferred tax liabilities for these earnings are in the range of $14.2 million to $28.4 million, as the withholding tax rate of the profit distribution will be 5% or 10% depends on whether the immediate offshore companies can enjoy the preferential withholding tax rate of 5%. The aggregate amount and per share effect of tax holiday are as follows:
|  | Years Ended December 31, |
|  | 2014 |  | 2015 |  | 2016 |
|  | (In Thousands of US Dollars, except per share data) |
The aggregate amount |  |  | — |  |  | — |  |  | 3,343 |
Per share—basic |  |  | — |  |  | — |  |  | 0.06 |
Per share—diluted |  |  | — |  |  | — |  |  | 0.06 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration