Income Tax (Tables)

12 Months Ended

Dec. 31, 2022

Income tax expense consisted of the following:


	Years Ended December 31
	2020			2021			2022
	NT$			NT$			NT$
	(In Millions)			(In Millions)			(In Millions)

Current income tax expense
Current tax expense recognized in the current year	$	87,452.7		$	107,694.4		$	190,022.2
Income tax adjustments on prior years		(7,589.4	)		(14,539.5	)		(19,413.0	)
Other income tax adjustments		150.2			152.2			206.1


		80,013.5			93,307.1			170,815.3

Deferred income tax benefit
The origination and reversal of temporary differences		(6,275.2	)		(17,530.0	)		(24,714.5	)
Investment tax credits		—			(5,621.7	)		4,676.7


		(6,275.2	)		(23,151.7	)		(20,037.8	)


Income tax expense recognized in profit or loss	$	73,738.3		$	70,155.4		$	150,777.5

Reconciliation of Income before Income Tax and Income Tax Expense Recognized in Profit or Loss

A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:


	Years Ended December 31
	2020			2021			2022
	NT$			NT$			NT$
	(In Millions)			(In Millions)			(In Millions)
Income before tax	$	584,746.3		$	663,036.0		$	1,144,072.2

Income tax expense at the statutory rate	$	118,831.3		$	134,595.2		$	231,776.1
Tax effect of adjusting items:
Nondeductible items in determining taxable income		1,015.9			11,279.5			12,309.8
Tax-exempt income		(65,988.1	)		(89,852.9	)		(157,955.9	)
Additional income tax under the Alternative Minimum Tax Act		18,872.8			32,852.7			61,578.0
Additional income tax on unappropriated earnings		14,747.3			18,849.5			42,336.8
The origination and reversal of temporary differences		(6,275.2	)		(17,530.0	)		(24,714.5	)
Income tax credits		(26.5	)		(5,651.3	)		4,654.1


		81,177.5			84,542.7			169,984.4
Income tax adjustments on prior years		(7,589.4	)		(14,539.5	)		(19,413.0	)
Other income tax adjustments		150.2			152.2			206.1


Income tax expense recognized in profit or loss	$	73,738.3		$	70,155.4		$	150,777.5

The income tax adjustments on prior years were primarily due to the difference between the actual and estimated income tax on unappropriated earnings.

Analysis of Deferred Income Tax Assets and Liabilities in Consolidated Statements of Financial Position

The analysis of deferred income tax assets and liabilities was as follows:


	December 31, 2021			December 31, 2022
	NT$			NT$
	(In Millions)			(In Millions)
Deferred income tax assets
Temporary differences
Depreciation	$	34,720.7		$	45,299.3
Refund liability		5,986.2			12,089.5
Unrealized exchange losses		—			5,782.4
Unrealized loss on inventories		899.0			2,305.3
Net defined benefit liability		1,237.1			1,722.0
Investment tax credits		5,621.7			945.0
Deferred compensation cost		374.0			361.2
Others		315.2			681.2


	$	49,153.9		$	69,185.9

Deferred income tax liabilities
Temporary differences
Unrealized exchange gains	$	(706.3	)	$	—
Others		(1,167.6	)		(1,031.4	)


	$	(1,873.9	)	$	(1,031.4	)


	Year Ended December 31, 2020
				Recognized in
	Balance, Beginning of Year			Profit or Loss			Other Comprehensive Income		Effect of Exchange Rate Changes			Balance, End of Year
	NT$			NT$			NT$		NT$			NT$
	(In Millions)			(In Millions)			(In Millions)		(In Millions)			(In Millions)
Deferred income tax assets
Temporary differences
Depreciation	$	13,547.2		$	5,824.0		$	—	$	(16.8	)	$	19,354.4
Refund liability		2,150.4			1,606.1			—		(1.4	)		3,755.1
Net defined benefit liability		1,016.3			(96.3	)		422.1		—			1,342.1
Unrealized loss on inventories		469.4			391.1			—		(2.0	)		858.5
Deferred compensation cost		323.1			27.4			—		(20.2	)		330.3
Others		422.0			(91.6	)		0.6		(13.2	)		317.8


	$	17,928.4		$	7,660.7		$	422.7	$	(53.6	)	$	25,958.2

Deferred income tax liabilities
Temporary differences
Unrealized exchange gains	$	(333.6	)	$	(532.9	)	$	—	$	—		$	(866.5	)
Others		(10.8	)		(852.6	)		—		—			(863.4	)


	$	(344.4	)	$	(1,385.5	)	$	—	$	—		$	(1,729.9	)


	Year Ended December 31, 2021
				Recognized in
	Balance, Beginning of Year			Profit or Loss			Other Comprehensive Income			Effect of Exchange Rate Changes			Balance, End of Year
	NT$			NT$			NT$			NT$			NT$
	(In Millions)			(In Millions)			(In Millions)			(In Millions)			(In Millions)
Deferred income tax assets
Temporary differences
Depreciation	$	19,354.4		$	15,365.7		$	—		$	0.6		$	34,720.7
Refund liability		3,755.1			2,231.5			—			(0.4	)		5,986.2
Investment tax credits		—			5,621.7			—			—			5,621.7
Net defined benefit liability		1,342.1			(75.9	)		(29.1	)		—			1,237.1
Unrealized loss on inventories		858.5			41.0			—			(0.5	)		899.0
Deferred compensation cost		330.3			49.2			—			(5.5	)		374.0
Others		317.8			59.1			(56.2	)		(5.5	)		315.2


	$	25,958.2		$	23,292.3		$	(85.3	)	$	(11.3	)	$	49,153.9

Deferred income tax liabilities
Temporary differences
Unrealized exchange gains	$	(866.5	)	$	160.2		$	—		$	—		$	(706.3	)
Others		(863.4	)		(300.8	)		(3.4	)		—			(1,167.6	)


	$	(1,729.9	)	$	(140.6	)	$	(3.4	)	$	—		$	(1,873.9	)



	Year Ended December 31, 2022
				Recognized in
	Balance, Beginning of Year			Profit or Loss			Other Comprehensive Income		Effect of Exchange Rate Changes			Balance, End of Year
	NT$			NT$			NT$		NT$			NT$
	(In Millions)			(In Millions)			(In Millions)		(In Millions)			(In Millions)
Deferred income tax assets
Temporary differences
Depreciation	$	34,720.7		$	10,552.2		$	—	$	26.4		$	45,299.3
Refund liability		5,986.2			6,100.8			—		2.5			12,089.5
Unrealized exchange losses		—			5,782.4			—		—			5,782.4
Unrealized loss on inventories		899.0			1,402.2			—		4.1			2,305.3
Net defined benefit liability		1,237.1			(249.1	)		734.0		—			1,722.0
Investment tax credits		5,621.7			(4,676.7	)		—		—			945.0
Deferred compensation cost		374.0			(48.2	)		—		35.4			361.2
Others		315.2			334.9			—		31.1			681.2


	$	49,153.9		$	19,198.5		$	734.0	$	99.5		$	69,185.9

Deferred income tax liabilities
Temporary differences
Unrealized exchange gains	$	(706.3	)	$	706.3		$	—	$	—		$	—
Others		(1,167.6	)		133.0			6.0		(2.8	)		(1,031.4	)


	$	(1,873.9	)	$	839.3		$	6.0	$	(2.8	)	$	(1,031.4	)

Tax-exemption Information Related to Profits Generated from Certain Projects


		Tax-exemption Period
Construction and expansion of 2009 by TSMC		2018 to 2022