23.Income Taxes
The income tax provision for the years ended December 31, 2017, 2016 and 2015 was comprised of:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|||
|
Income taxes, current (1) |
|
Ps. |
5,382,865 |
|
Ps. |
6,724,071 |
|
Ps. |
7,380,430 |
|
|
Income taxes, deferred |
|
(1,108,745 |
) |
(3,851,836 |
) |
(1,048,212 |
) |
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
Ps. |
4,274,120 |
|
Ps. |
2,872,235 |
|
Ps |
6,332,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The current income tax of Mexican companies payable in Mexico represented 93%, 93% and 94% of total current income taxes in 2017, 2016 and 2015, respectively. |
The Mexican corporate income tax rate was 30% in 2017, 2016 and 2015. In accordance with the 2014 Tax Reform, the corporate income tax rate will be 30% in 2018 and thereafter.
2014 Tax Reform
In the last quarter of 2013, the Mexican Congress approved a new Tax Reform (the “2014 Tax Reform”), which became effective as of January 1, 2014. Among the tax reforms approved by the Mexican Congress, one of the most relevant changes was the elimination of the tax consolidation regime allowed for Mexican controlling companies through December 31, 2013. As a result of this change, beginning on January 1, 2014, the Company is no longer allowed to consolidate income or loss of its Mexican subsidiaries for income tax purposes and (i) accounted for an additional income tax liability for the elimination of the tax consolidation regime in the aggregate amount of Ps.6,813,595 as of December 31, 2013; (ii) recognized a benefit from tax loss carryforwards of Mexican companies in the Group in the aggregate amount of Ps.7,936,044 as of December 31, 2013; and (iii) adjusted the carrying amount of deferred income taxes from temporary differences by recognizing such effects on a separate company basis by using the enacted corporate income tax rate as of December 31, 2013.
The income tax payable as of December 31, 2017 and 2016, in connection with the 2014 Mexican Tax Reform, are as follows:
|
|
|
2017 |
|
2016 |
|
||
|
Tax losses of subsidiaries, net |
|
Ps. |
6,582,543 |
|
Ps. |
7,575,347 |
|
|
Less: Current portion (a) |
|
1,851,923 |
|
1,188,470 |
|
||
|
|
|
|
|
|
|
||
|
Non-current portion (b) |
|
Ps. |
4,730,620 |
|
Ps. |
6,386,877 |
|
|
|
|
|
|
|
|
|
|
|
(a) |
Accounted for as current income taxes payable in the consolidated statement of financial position as of December 31, 2017 and 2016. |
|
(b) |
Accounted for as non-current income taxes payable in the consolidated statement of financial position as of December 31, 2017 and 2016. |
Maturities of income tax payable, in connection with the 2014 Mexican Tax Reform, are as follows:
|
2018 |
|
Ps. |
1,851,923 |
|
|
2019 |
|
1,733,977 |
|
|
|
2020 |
|
1,364,183 |
|
|
|
2021 |
|
942,553 |
|
|
|
2022 |
|
578,437 |
|
|
|
2023 |
|
111,470 |
|
|
|
|
|
|
|
|
|
|
|
Ps. |
6,582,543 |
|
|
|
|
|
|
|
The following items represent the principal differences between income taxes computed at the statutory rate and the Group’s provision for income taxes.
|
|
|
% |
|
% |
|
% |
|
|
Statutory income tax rate |
|
30 |
|
30 |
|
30 |
|
|
Differences between accounting and tax bases, primarily tax inflation gain that is not recognized for accounting purposes |
|
10 |
|
1 |
|
4 |
|
|
Asset tax |
|
— |
|
5 |
|
— |
|
|
Tax loss carryforwards |
|
(2 |
) |
(20 |
) |
(10 |
) |
|
2014 Tax Reform |
|
1 |
|
19 |
|
1 |
|
|
Foreign operations |
|
5 |
|
4 |
|
(2 |
) |
|
Disposition of investment |
|
— |
|
— |
|
10 |
|
|
Share of income in associates and joint ventures, net |
|
(5 |
) |
(4 |
) |
— |
|
|
Exchange of Convertible Debentures for Warrants of UHI |
|
— |
|
— |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
39 |
|
35 |
|
34 |
|
|
|
|
|
|
|
|
|
|
The Group has recognized the benefits from tax loss carryforwards of Mexican companies in the Group as of December 31, 2017 and 2016. The years of expiration of tax loss carryforwards as of December 31, 2017 are as follows:
|
Year of Expiration |
|
Tax Loss |
|
|
|
2018 |
|
Ps. |
55,400 |
|
|
2019 |
|
819,597 |
|
|
|
2020 |
|
232,925 |
|
|
|
2021 |
|
7,210,423 |
|
|
|
2022 |
|
10,626,630 |
|
|
|
Thereafter |
|
22,418,325 |
|
|
|
|
|
|
|
|
|
|
|
Ps. |
41,363,300 |
|
|
|
|
|
|
|
As of December 31, 2017, tax loss carryforwards of Mexican companies in the Group for which deferred tax assets were not recognized amounted to Ps.2,283,423, and will expire between 2019 and 2027.
During 2017, 2016 and 2015, certain Mexican subsidiaries utilized operating tax loss carryforwards in the amounts of Ps.5,806,602, Ps.1,236,444 and Ps.2,931,218, respectively.
In addition to the tax loss carryforwards of Mexican companies in the Group referred as of December 31, 2017, the Group has recognized the benefit from tax loss carryforwards derived from the disposal in 2014 of its investment in GSF in the amount of Ps.13,996,133 (see Note 3). As of December 31, 2017, tax loss carryforwards derived from this disposal for which deferred taxes were recognized amounted to Ps.10,497,100, and will expire in 2025.
As of December 31, 2017, tax loss carryforwards of subsidiaries in South America, the United States, and Europe amounted to Ps.2,925,562, and will expire between 2018 and 2036.
The deferred income taxes as of December 31, 2017 and 2016, were principally derived from the following temporary differences and tax loss carryforwards:
|
|
|
2017 |
|
2016 |
|
||
|
Assets: |
|
|
|
|
|
||
|
Accrued liabilities |
|
Ps. |
3,388,289 |
|
Ps. |
3,208,863 |
|
|
Allowance for doubtful accounts |
|
1,115,990 |
|
1,160,708 |
|
||
|
Customer advances |
|
2,230,958 |
|
2,761,196 |
|
||
|
Property, plant and equipment, net |
|
1,159,085 |
|
— |
|
||
|
Tax loss carryforwards: |
|
|
|
|
|
||
|
Operating |
|
10,596,342 |
|
11,448,996 |
|
||
|
Capital |
|
1,812,648 |
|
2,380,620 |
|
||
|
|
|
|
|
|
|
||
|
Liabilities: |
|
|
|
|
|
||
|
Investments (1) |
|
(3,968,176 |
) |
(4,471,232 |
) |
||
|
Property, plant and equipment, net |
|
— |
|
(305,654 |
) |
||
|
Derivative financial instruments |
|
(355,051 |
) |
— |
|
||
|
Intangible assets and transmission rights |
|
(2,646,267 |
) |
(2,898,572 |
) |
||
|
Prepaid expenses and other items |
|
(1,274,056 |
) |
(1,184,163 |
) |
||
|
|
|
|
|
|
|
||
|
Deferred income taxes of Mexican companies |
|
12,059,762 |
|
12,100,762 |
|
||
|
Deferred income tax assets of foreign subsidiaries |
|
257,769 |
|
279,683 |
|
||
|
|
|
|
|
|
|
||
|
Deferred income tax assets, net |
|
Ps. |
12,317,531 |
|
Ps. |
12,380,445 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
Net of the benefit from tax loss carryforwards derived from the disposal in 2014 of the Group’s investment in GSF, in the amount of Ps.3,149,130 and Ps.2,914,499 in 2017 and 2016, respectively. |
The deferred tax assets are in tax jurisdictions in which the Group considers that based on financial projections of its cash flows, results of operations and synergies between subsidiaries, will generate taxable income in subsequent periods.
The gross rollforward of deferred income tax assets, net, is as follows:
|
|
|
2017 |
|
2016 |
|
||
|
At January 1 |
|
Ps. |
12,380,445 |
|
Ps. |
7,665,038 |
|
|
Income statement credit |
|
1,108,745 |
|
3,851,836 |
|
||
|
Other comprehensive income and equity (charge) credit |
|
(1,080,344 |
) |
863,571 |
|
||
|
Loss on disposition of a Publishing business |
|
(91,315 |
) |
— |
|
||
|
|
|
|
|
|
|
||
|
At December 31 |
|
Ps. |
12,317,531 |
|
Ps. |
12,380,445 |
|
|
|
|
|
|
|
|
|
|
The rollforward of deferred income tax assets and liabilities for the year 2017, was as follows:
|
|
|
At January 1, 2017 |
|
Credit (Charge) to |
|
Credit (Charge) to |
|
At December 31, |
|
|||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|||||
|
Accrued liabilities |
|
Ps. |
3,208,863 |
|
Ps. |
179,426 |
|
Ps. |
— |
|
Ps. |
3,388,289 |
|
|
|
Allowance for doubtful accounts |
|
1,160,708 |
|
(44,718 |
) |
— |
|
1,115,990 |
|
|||||
|
Customer advances |
|
2,761,196 |
|
(530,238 |
) |
— |
|
2,230,958 |
|
|||||
|
Property, plant and equipment, net |
|
— |
|
1,159,085 |
|
— |
|
1,159,085 |
|
|||||
|
Tax loss carryforwards |
|
13,829,616 |
|
(628,278 |
) |
(792,348 |
) |
12,408,990 |
|
|||||
|
Deferred income tax assets of foreign subsidiaries |
|
279,683 |
|
(21,914 |
) |
— |
|
257,769 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|||||
|
Investments |
|
(4,471,232 |
) |
721,525 |
|
(218,469 |
) |
(3,968,176 |
) |
|||||
|
Property, plant and equipment, net |
|
(305,654 |
) |
305,654 |
|
— |
|
— |
|
|||||
|
Derivative financial instruments |
|
— |
|
(355,051 |
) |
— |
|
(355,051 |
) |
|||||
|
Intangible assets and transmission rights |
|
(2,898,572 |
) |
252,305 |
|
— |
|
(2,646,267 |
) |
|||||
|
Prepaid expenses and other items |
|
(1,184,163 |
) |
(20,366 |
) |
(69,527 |
) |
(1,274,056 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Deferred income tax assets, net |
|
Ps. |
12,380,445 |
|
Ps. |
1,017,430 |
|
Ps. |
(1,080,344 |
) |
Ps. |
12,317,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The rollforward of deferred income tax assets and liabilities for the year 2016, was as follows:
|
|
|
At January 1, 2016 |
|
Credit (Charge) to |
|
Credit (Charge) to |
|
At December 31. |
|
||||
|
Assets: |
|
|
|
|
|
|
|
|
|
||||
|
Accrued liabilities |
|
Ps. |
2,656,354 |
|
Ps. |
552,509 |
|
Ps. |
— |
|
Ps. |
3,208,863 |
|
|
Allowance for doubtful accounts |
|
1,187,427 |
|
(26,719 |
) |
— |
|
1,160,708 |
|
||||
|
Customer advances |
|
2,598,037 |
|
163,159 |
|
— |
|
2,761,196 |
|
||||
|
Tax loss carryforwards |
|
10,196,480 |
|
3,633,136 |
|
— |
|
13,829,616 |
|
||||
|
Deferred income tax assets of foreign subsidiaries |
|
195,348 |
|
84,335 |
|
— |
|
279,683 |
|
||||
|
Asset tax |
|
402,880 |
|
(402,880 |
) |
— |
|
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Liabilities: |
|
|
|
|
|
|
|
|
|
||||
|
Investments |
|
(3,504,137 |
) |
(2,067,429 |
) |
1,100,334 |
|
(4,471,232 |
) |
||||
|
Property, plant and equipment, net |
|
(954,678 |
) |
649,024 |
|
— |
|
(305,654 |
) |
||||
|
Derivative financial instruments |
|
(1,801 |
) |
1,801 |
|
— |
|
— |
|
||||
|
Intangible assets and transmission rights |
|
(3,922,230 |
) |
1,023,658 |
|
— |
|
(2,898,572 |
) |
||||
|
Prepaid expenses and other items |
|
(1,188,642 |
) |
241,242 |
|
(236,763 |
) |
(1,184,163 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Deferred income tax assets, net |
|
Ps. |
7,665,038 |
|
Ps. |
3,851,836 |
|
Ps. |
863,571 |
|
Ps. |
12,380,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The tax (charge) credit relating to components of other comprehensive income is as follows:
|
|
|
2017 |
|
|||||||
|
|
|
Before Tax |
|
Tax (Charge) |
|
After Tax |
|
|||
|
Remeasurement of post-employment benefit obligations |
|
Ps. |
(283,106 |
) |
Ps. |
— |
|
Ps. |
(283,106 |
) |
|
Exchange differences on translating foreign operations |
|
334,097 |
|
(78,040 |
) |
256,057 |
|
|||
|
Derivative financial instruments cash flow hedges |
|
231,758 |
|
(69,527 |
) |
162,231 |
|
|||
|
Warrants exercisable for common stock of UHI |
|
(280,447 |
) |
84,134 |
|
(196,313 |
) |
|||
|
Available-for-sale investments |
|
1,008,675 |
|
(302,603 |
) |
706,072 |
|
|||
|
Share of loss of associates and joint ventures |
|
(60,340 |
) |
— |
|
(60,340 |
) |
|||
|
|
|
|
|
|
|
|
|
|||
|
Other comprehensive income |
|
Ps. |
950,637 |
|
Ps. |
(366,036 |
) |
Ps. |
584,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax |
|
|
|
Ps. |
(78,040 |
) |
|
|
||
|
Deferred tax |
|
|
|
(287,996 |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Ps. |
(366,036 |
) |
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2016 |
|
|||||||||
|
|
|
Before Tax |
|
Tax (Charge) |
|
After Tax |
|
|||||
|
Remeasurement of post-employment benefit obligations |
|
Ps. |
(255,713 |
) |
Ps. |
— |
|
Ps. |
(255,713 |
) |
||
|
Exchange differences on translating foreign operations |
|
767,165 |
|
356,829 |
|
1,123,994 |
|
|||||
|
Derivative financial instruments cash flow hedges |
|
789,208 |
|
(236,763 |
) |
552,445 |
|
|||||
|
Warrants exercisable for common stock of UHI |
|
(3,635,399 |
) |
1,090,620 |
|
(2,544,779 |
) |
|||||
|
Available-for-sale investments |
|
(32,379 |
) |
9,714 |
|
(22,665 |
) |
|||||
|
Share of loss of associates and joint ventures |
|
(42,832 |
) |
— |
|
(42,832 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Other comprehensive loss |
|
Ps. |
(2,409,950 |
) |
Ps. |
1,220,400 |
|
Ps. |
(1,189,550 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Current tax |
|
|
|
Ps. |
356,829 |
|
|
|
||||
|
Deferred tax |
|
|
|
863,571 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
Ps. |
1,220,400 |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
2015 |
|
|||||||
|
|
|
Before Tax |
|
Tax (Charge) |
|
After Tax |
|
|||
|
Remeasurement of post-employment benefit obligations |
|
Ps. |
(166,044 |
) |
Ps. |
— |
|
Ps. |
(166,044 |
) |
|
Exchange differences on translating foreign operations |
|
498,954 |
|
206,520 |
|
705,474 |
|
|||
|
Equity instruments |
|
405,132 |
|
(121,541 |
) |
283,591 |
|
|||
|
Cumulative gain in fair value from equity instruments reclassified to other finance income |
|
(544,402 |
) |
163,321 |
|
(381,081 |
) |
|||
|
Derivative financial instruments cash flow hedges |
|
25,838 |
|
(7,751 |
) |
18,087 |
|
|||
|
Convertible Debentures due 2025 issued by UHI |
|
319,307 |
|
(95,821 |
) |
223,486 |
|
|||
|
Cumulative gain in fair value from Convertible Debentures issuedby UHI reclassified to other finance income |
|
(4,718,175 |
) |
1,415,453 |
|
(3,302,722 |
) |
|||
|
Warrants exercisable for common stock of UHI |
|
3,303,182 |
|
(990,955 |
) |
2,312,227 |
|
|||
|
Available-for-sale investments |
|
(80,371 |
) |
24,111 |
|
(56,260 |
) |
|||
|
Share of income of associates and joint ventures |
|
19,705 |
|
— |
|
19,705 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Other comprehensive loss |
|
Ps. |
(936,874 |
) |
Ps. |
593,337 |
|
Ps. |
(343,537 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax |
|
|
|
Ps. |
206,520 |
|
|
|
||
|
Deferred tax |
|
|
|
386,817 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Ps. |
593,337 |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
The Group does not recognize deferred income tax liabilities related to its investments in associates and joint ventures, as the Group is able to control the timing of the reversal of temporary differences arising from these investments. As of December 31, 2017 and 2016, the deferred tax liabilities in connection with the Group’s investments in associates and joint ventures amounted to an aggregate of Ps.1,383,713 and Ps.1,252,044, respectively.