17. Current Taxes and Deferred Taxes:
(a) Current Tax:
As of each year end, the Bank and its subsidiaries have established a First Category Income Tax Provision of MCh$122,644 and MCh$108,844 as of December 31, 2016 and 2017, determined in accordance with current tax laws. The net tax to be paid or recovered is detailed as follows:
|
|
|
2016 |
|
2017 |
|
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
Income taxes |
|
122,644 |
|
108,844 |
|
|
Less: |
|
|
|
|
|
|
Monthly prepaid taxes (PPM) |
|
(126,266 |
) |
(123,717 |
) |
|
Credit for training expenses |
|
(2,031 |
) |
(2,036 |
) |
|
Real Estate Tax |
|
— |
|
— |
|
|
Other |
|
(1,004 |
) |
(2,670 |
) |
|
|
|
|
|
|
|
|
Total tax payable (receivable), net |
|
(6,657 |
) |
(19,579 |
) |
|
|
|
|
|
|
|
|
|
|
2016 |
|
2017 |
|
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
Current tax assets |
|
6,657 |
|
23,032 |
|
|
Current tax liabilities |
|
— |
|
(3,453 |
) |
|
|
|
|
|
|
|
|
Total tax receivable, net |
|
6,657 |
|
19,579 |
|
|
|
|
|
|
|
|
(b) Income Tax:
The Bank’s tax expense recorded for the years ended December 31, 2015, 2016 and 2017 is detailed as follows:
|
|
|
2015 |
|
2016 |
|
2017 |
|
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
Income tax expense: |
|
|
|
|
|
|
|
|
Current year taxes |
|
122,147 |
|
134,759 |
|
105,024 |
|
|
Tax from previous period |
|
(1,851 |
) |
1,030 |
|
(1,401 |
) |
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
120,296 |
|
135,789 |
|
103,623 |
|
|
(Credit) charge for deferred taxes: |
|
|
|
|
|
|
|
|
Origin and reversal of temporary differences |
|
(18,964 |
) |
(26,044 |
) |
20,043 |
|
|
Effect of changes in tax rate |
|
(18,234 |
) |
(9,158 |
) |
(5,729 |
) |
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
(37,198 |
) |
(35,202 |
) |
14,314 |
|
|
Other |
|
(777 |
) |
(375 |
) |
(2,576 |
) |
|
|
|
|
|
|
|
|
|
|
Net charge to income for income taxes |
|
82,321 |
|
100,212 |
|
115,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Rate |
|
22.50 |
% |
24.00 |
% |
25.50 |
% |
(c) Reconciliation of effective tax rate:
The following table reconciles the income tax rate to the effective rate applied to determine the Bank’s income tax expense as of December 31, 2015, 2016 and 2017:
|
|
|
2015 |
|
2016 |
|
2017 |
|
||||||
|
|
|
Tax rate |
|
MCh$ |
|
Tax rate |
|
MCh$ |
|
Tax rate |
|
MCh$ |
|
|
Income tax calculated on net income before tax |
|
22.50 |
|
155,751 |
|
24.00 |
|
162,063 |
|
25.50 |
|
175,298 |
|
|
Subordinated Debt Payment (*) |
|
(4.57 |
) |
(31,638 |
) |
(5.05 |
) |
(34,092 |
) |
(5.67 |
) |
(38,997 |
) |
|
Additions or deductions (**) |
|
(3.91 |
) |
(27,032 |
) |
(3.90 |
) |
(26,332 |
) |
(2.88 |
) |
(19,794 |
) |
|
Tax from previous years |
|
(0.27 |
) |
(1,851 |
) |
0.15 |
|
1,030 |
|
(0.20 |
) |
(1,401 |
) |
|
Effect of changes in tax rate |
|
(2.63 |
) |
(18,234 |
) |
(1.36 |
) |
(9,158 |
) |
(0.83 |
) |
(5,729 |
) |
|
Other |
|
0.77 |
|
5,325 |
|
1.00 |
|
6,701 |
|
0.87 |
|
5,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective rate and income tax expense |
|
11.89 |
|
82,321 |
|
14.84 |
|
100,212 |
|
16.79 |
|
115,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) The tax benefit associated with the dividend payment made to SAOS S.A., as payment of the subordinated debt held with the Central Bank, should disappear as the liability of SM-Chile with the Central Bank is completely paid off.
(**) The deductions of the tax rate for 2015, 2016 and 2017 mainly relate to permanent differences between tax and financial accounting rules.
On September 29, 2014, Law 20,780, published in the Diario Oficial of Chile (equivalent to the “Federal Register”), amended the System of Income Taxation and introduced various adjustments to the tax system.
Additionally, on February 8, 2016 Law 20,899 was published, which established that open corporations must apply the tax regime of the first category with partial deduction of the credit in the final taxes. A regime characterized by the fact that shareholders will only be entitled to allocate against personal taxes (Global Supplementary or Additional), 65% of the first category tax paid by the company.
Law 20,780 establishes a gradual increase of rates to the first category tax regime as follows:
|
Year |
|
Rate |
|
|
2014 |
|
21.0 |
% |
|
2015 |
|
22.5 |
% |
|
2016 |
|
24.0 |
% |
|
2017 |
|
25.5 |
% |
|
2018 |
|
27.0 |
% |
Additionally, according to No. 11 of Article 1 of Law 20,780, as of January 1, 2017, the rate of sole tax has been increased to rejected expenses of article 21 from 35% to 40%.
(b) Effect of deferred taxes on income and equity:
The effects of deferred taxes on assets, liabilities and income accounts are detailed as follows:
|
|
|
Balance as |
|
Effect |
|
Balance as |
|
Effect |
|
Balance as |
|
Effect |
|
Balance as |
|
||||||
|
|
|
2014 |
|
Income |
|
Equity |
|
2015 |
|
Income |
|
Equity |
|
2016 |
|
Income |
|
Equity |
|
31, 2017 |
|
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
Debit differences: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowances for loan losses |
|
100,734 |
|
14,804 |
|
— |
|
115,538 |
|
12,181 |
|
— |
|
127,719 |
|
(12,276 |
) |
— |
|
115,443 |
|
|
Obligations with agreements to repurchase |
|
(968 |
) |
— |
|
— |
|
(968 |
) |
— |
|
— |
|
(968 |
) |
— |
|
— |
|
(968 |
) |
|
Personnel provisions |
|
9,597 |
|
(1,447 |
) |
— |
|
8,150 |
|
3,081 |
|
— |
|
11,231 |
|
1,290 |
|
— |
|
12,521 |
|
|
Staff vacations |
|
5,489 |
|
779 |
|
— |
|
6,268 |
|
406 |
|
— |
|
6,674 |
|
234 |
|
— |
|
6,908 |
|
|
Accrued interest and indexation adjustments from past due loans |
|
3,738 |
|
286 |
|
— |
|
4,024 |
|
(669 |
) |
— |
|
3,355 |
|
59 |
|
— |
|
3,414 |
|
|
Staff severance indemnities provision |
|
2,344 |
|
(117 |
) |
9 |
|
2,236 |
|
(337 |
) |
(45 |
) |
1,854 |
|
(352 |
) |
(45 |
) |
1,457 |
|
|
Provisions of credit card expenses |
|
10,637 |
|
2,991 |
|
— |
|
13,628 |
|
(1,169 |
) |
— |
|
12,459 |
|
(3,504 |
) |
— |
|
8,955 |
|
|
Provisions of accrued expenses |
|
11,466 |
|
220 |
|
102 |
|
11,788 |
|
2,701 |
|
— |
|
14,489 |
|
1,869 |
|
— |
|
16,358 |
|
|
Leasing |
|
— |
|
18,239 |
|
— |
|
18,239 |
|
18,880 |
|
— |
|
37,119 |
|
(4,570 |
) |
— |
|
32,549 |
|
|
Other adjustments |
|
4,009 |
|
258 |
|
— |
|
4,267 |
|
975 |
|
— |
|
5,242 |
|
1,411 |
|
1 |
|
6,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debit differences |
|
147,046 |
|
36,013 |
|
111 |
|
183,170 |
|
36,049 |
|
(45 |
) |
219,174 |
|
(15,839 |
) |
(44 |
) |
203,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit differences: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments with agreement to repurchase |
|
125 |
|
— |
|
— |
|
125 |
|
— |
|
— |
|
125 |
|
— |
|
— |
|
125 |
|
|
Depreciation of property and equipment and investment properties |
|
14,304 |
|
(1,141 |
) |
— |
|
13,163 |
|
(1,348 |
) |
— |
|
11,815 |
|
2,466 |
|
— |
|
14,281 |
|
|
Adjustment for valuation financial assets available-for-sale |
|
11,310 |
|
— |
|
2,357 |
|
13,667 |
|
— |
|
(12,575 |
) |
1,092 |
|
1 |
|
1,299 |
|
2,392 |
|
|
Hedge cash adjustment |
|
259 |
|
— |
|
— |
|
259 |
|
— |
|
— |
|
259 |
|
— |
|
— |
|
259 |
|
|
Leasing equipment |
|
1,898 |
|
(2,992 |
) |
— |
|
(1,094 |
) |
— |
|
— |
|
(1,094 |
) |
— |
|
— |
|
(1,094 |
) |
|
Transitory assets |
|
3,633 |
|
162 |
|
— |
|
3,795 |
|
977 |
|
— |
|
4,772 |
|
714 |
|
— |
|
5,486 |
|
|
Derivative instruments adjustments |
|
5,983 |
|
4,296 |
|
— |
|
10,279 |
|
(2,572 |
) |
— |
|
7,707 |
|
(3,329 |
) |
— |
|
4,378 |
|
|
Assets received in lieu of payments |
|
(1,434 |
) |
(196 |
) |
— |
|
(1,630 |
) |
240 |
|
— |
|
(1,390 |
) |
830 |
|
— |
|
(560 |
) |
|
Accrued interest to effective rate |
|
2,303 |
|
257 |
|
— |
|
2,560 |
|
(313 |
) |
— |
|
2,247 |
|
(644 |
) |
— |
|
1,603 |
|
|
Intangible assets amortization |
|
7,141 |
|
(501 |
) |
— |
|
6,640 |
|
(550 |
) |
— |
|
6,090 |
|
(587 |
) |
— |
|
5,503 |
|
|
Other adjustments |
|
7,284 |
|
(1,070 |
) |
— |
|
6,214 |
|
4,413 |
|
1 |
|
10,628 |
|
(976 |
) |
1 |
|
9,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total credit differences |
|
52,806 |
|
(1,185 |
) |
2,357 |
|
53,978 |
|
847 |
|
(12,574 |
) |
42,251 |
|
(1,525 |
) |
1,300 |
|
42,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (Liabilities), net |
|
94,240 |
|
37,198 |
|
(2,246 |
) |
129,192 |
|
35,202 |
|
12,529 |
|
176,923 |
|
(14,314 |
) |
(1,344 |
) |
161,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|