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26. Income tax
 12 Months Ended
Dec. 31, 2018
Income Tax  
Income tax

The analysis of deferred tax assets and liabilities is as follows: 

 

  12.31.17   Result from exposure to inflation   Charged to profit and loss   Charged to other comprehensive income   12.31.18
Deferred tax assets                  
Inventories 13,454   (9,064)   (4,390)   -   -
Trade receivables and other receivables 481,066   (371,025)   335,061   -   445,102
Trade payables and other payables 424,670   757,645   772,447   -   1,954,762
Salaries and social security taxes payable (95,813)   130,428   14,824   -   49,439
Benefit plans 219,113   (128,800)   13,980   1,691   105,984
Tax liabilities 55,897   (43,540)   3,274   -   15,631
Provisions (546,274)   755,078   137,055   -   345,859
Deferred tax asset 605,906   1,036,929   1,272,251   1,691   2,916,777
                   
Deferred tax liabilities:                  
Property, plant and equipment (7,466,457)   903,151   (4,184,856)   -   (10,748,162)
Financial assets at fair value through profit or loss (386,145)   374,867   (201,199)   -   (212,477)
Borrowings (43,454)   37,986   1,022   -   (4,446)
Deferred tax liability (7,896,056)   1,316,004   (4,385,033)   -   (10,965,085)
                   
Net deferred tax (liabilities) assets (7,290,150)   2,352,933   (3,112,782)   1,691   (8,048,308)

 

  12.31.16   Result from exposure to inflation   Charged to profit and loss   Charged to other comprehensive income   12.31.17
Deferred tax assets                  
Tax loss carryforward 6,160   (1,988)   49,620   -   53,792
Inventories 7,520   (2,427)   8,361   -   13,454
Trade receivables and other receivables 204,972   (66,156)   342,250   -   481,066
Trade payables and other payables 1,659,011   (535,455)   (698,886)   -   424,670
Salaries and social security taxes payable 36,176   (11,676)   (120,313)   -   (95,813)
Benefit plans 154,759   (49,949)   121,519   (7,216)   219,113
Tax liabilities 23,232   (7,498)   40,163   -   55,897
Provisions 221,846   (71,602)   (696,518)   -   (546,274)
Deferred tax asset 2,313,676   (746,751)   (953,803)   (7,216)   605,906
                   
Deferred tax liabilities:                  
Property, plant and equipment (9,779,890)   3,027,954   (714,521)   -   (7,466,457)
Financial assets at fair value through profit or loss (59,581)   19,230   (345,794)   -   (386,145)
Borrowings (12,424)   4,010   (35,040)   -   (43,454)
Deferred tax liability (9,851,895)   3,051,194   (1,095,355)   -   (7,896,056)
                   
Net deferred tax (liabilities) assets (7,538,219)   2,304,443   (2,049,158)   (7,216)   (7,290,150)

 

  12.31.18   12.31.17
Deferred tax assets:      
To be recover in less than 12 moths 2,310,153   669,450
To be recover in more than 12 moths 606,624   1,756,314
Deferred tax asset 2,916,777   2,425,764
       
Deferred tax liabilities:      
To be recover in less than 12 moths (1,966,173)   (2,740,288)
To be recover in more than 12 moths (8,998,912)   (6,975,626)
Deferred tax liability (10,965,085)   (9,715,914)
       
Net deferred tax assets (liabilities) (8,048,308)   (7,290,150)

 

The detail of the income tax expense for the year includes two effects: (i) the current tax for the year payable in accordance with the tax legislation applicable to the Company; (ii) the effect of applying the deferred tax method which recognizes the effect of the temporary differences arising from the valuation of assets and liabilities for accounting and tax purposes. 

 

    12.31.18   12.31.17   12.31.16
Deferred tax                     (759,849)   255,285   342,403
Current tax   (1,114,384)   (760,641)   (484,887)
Difference between provision and tax return                         (3,163)   (4,700)   (4,786)
Income tax expense   (1,877,396)   (510,056)   (147,270)

 

Tax Reform in Argentina

 

On December 29, 2017, the PEN enacted Law No. 27,430 – Income Tax. This Law has introduced several amendments to the treatment of income tax, whose key components are the following:

 

Income tax rate: The Income tax rate for Argentine companies will be gradually reduced from 35% to 30% for fiscal years beginning as from January 1, 2018 until December 31, 2019 and to 25% for fiscal years beginning on or after January 1, 2020.

 

Dividend withholding tax: A tax is introduced on dividends or profits distributed, among others, by Argentine companies or permanent establishments to: individuals, undivided estates or foreign beneficiaries, with the following considerations: (i) dividends deriving from profits generated during fiscal years beginning as from January 1, 2018 until December 31, 2019 will be subject to a withholding of 7%; and (ii) dividends arising from profits obtained in fiscal years beginning on or after January 1, 2020 will be subject to a 13% withholding.

 

The dividends arising from benefits obtained until the fiscal year prior to that beginning as from January 1, 2018 will continue to be subject, for all the beneficiaries thereof, to the 35% withholding on the amount exceeding the non-taxable distributable cumulative income (transition period of the equalization tax).

 

Optional tax revaluation: The law establishes that the Companies will have the option of carrying out a revaluation for tax purposes of the assets located in the country that generate taxable income. The special tax on the amount of the revaluation depends on the asset, amounting to 8% for real property not regarded as inventories, to 15% for real property regarded as inventories, and to 10 % for personal property and all other assets. If the option is exercised for a certain asset, all the other assets of the same category must be revalued. The tax result arising from the revaluation is not subject to income tax, and the special tax on the amount of the revaluation will not be deductible from such tax. The Company is currently analyzing the impacts of the aforementioned option.

 

Adjustment of deductions: Acquisitions or investments made in fiscal years beginning on or after January 1, 2018 will be adjusted on the basis of the IPIM’s percentage variations published by the INDEC. This situation will increase the deductible amortization and its tax deductible cost in case of sale.

 

    12.31.18   12.31.17   12.31.16
Profit for the year before taxes   6,174,862   5,590,691   388,041
Applicable tax rate   30%   35%   35%
Loss for the year at the tax rate (1,852,459)   (1,956,742)   (135,814)
Gain (Loss) from interest in joint ventures   560   (6)   (3)
Non-taxable income    220,769   115,661   138,040
Gain on net monetary position and others   (1,007,010)   902,631   (144,707)
Difference between provision and tax return   (3,163)   (4,700)   (4,786)
Change in the income tax rate (1)                       763,907   433,100   -
Income tax expense   (1,877,396)   (510,056)   (147,270)

 

  (1) Refers to the effect of applying to deferred tax assets and liabilities the changes in income tax rates in accordance with the previously detailed tax reform on the basis of the year in which they are expected to be realized/settled.

 

The income tax payable, net of withholdings is detailed below. 

 

     12.31.18     12.31.17 
Current        
Tax payable 2017                  1,114,384                     760,641
Total Tax payable                  1,114,384                     760,641
Tax withholdings                  (497,058)                    (71,550)
Total current                     617,326                     689,091