15. INCOME TAX
The calculation of the income tax expense accrued for the years ended December 31, 2017, 2016 and 2015 is as follows:
| 2017 | 2016 | 2015 | ||||||||||
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Current income tax |
(605 | ) | (734 | ) | 517 | |||||||
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Deferred income tax |
4,574 | 2,159 | (25,154 | ) | ||||||||
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| 3,969 | 1,425 | (24,637 | ) | |||||||||
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The reconciliation between the charge to income for income tax for the years ended December 31, 2017, 2016 and 2015 and the one that would result from applying the prevailing tax rate on net income before income tax arising from the consolidated statements of comprehensive income for each year is as follows:
| 2017 | 2016 | 2015 | ||||||||||
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Net income before income tax |
8,703 | (29,804 | ) | 29,063 | ||||||||
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Statutory tax rate |
35 | % | 35 | % | 35 | % | ||||||
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Statutory tax rate applied to net income before income tax |
(3,046 | ) | 10,431 | (10,172 | ) | |||||||
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Effect of the valuation of property, plant and equipment and intangible assets measured in functional currency |
(18,185 | ) | (19,543 | ) | (31,200 | ) | ||||||
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Exchange differences |
12,318 | 12,237 | 19,164 | |||||||||
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Effect of the valuation of inventories |
(1,558 | ) | (1,819 | ) | (2,412 | ) | ||||||
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Income on investments in associates and joint ventures |
500 | 206 | 111 | |||||||||
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Effect by change of tax rate(1) |
13,892 | — | — | |||||||||
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Miscellaneous |
48 | (87 | ) | (128 | )(2) | |||||||
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Income tax expense |
3,969 | 1,425 | (24,637 | ) | ||||||||
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| (1) | Contemplates the recovery of the deferred income tax decrease. See Notes 2.b.15 and 30.l. |
| (2) | Includes 301 of tax loss carryforwards originated during previous years |
Breakdown of deferred tax as of December 31, 2017, 2016 and 2015 is as follows:
| 2017 | 2016 | 2015 | ||||||||||
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Deferred tax assets |
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Provisions and other non-deductible liabilities |
1,861 | 3,607 | 3,093 | |||||||||
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Tax losses carryforward and other tax credits |
6,484 | 3,837 | 3,236 | |||||||||
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Miscellaneous |
99 | 82 | 83 | |||||||||
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Total deferred tax assets |
8,444 | 7,526 | 6,412 | |||||||||
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Deferred tax liabilities |
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Property, plant and equipment |
(43,931 | ) | (45,579 | ) | (45,393 | ) | ||||||
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Miscellaneous |
(1,570 | ) | (3,848 | ) | (4,877 | ) | ||||||
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Total deferred tax liabilities |
(45,501 | ) | (49,427 | ) | (50,270 | ) | ||||||
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Total Net deferred tax |
(37,057 | ) | (41,901 | ) | (43,858 | ) | ||||||
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For fiscal year ended December 31, 2017, the Group estimated a tax loss carryforward of 8,776. Deferred income tax assets are recognized for tax loss carryforwards to the extent their setoff through future taxable profits is probable. Tax loss carryforwards in Argentina expire within 5 years.
In order to fully realize the deferred income tax asset, the Group will need to generate taxable income. Based upon the level of historical taxable income and projections for future over the years in which the deferred income tax are deductible, Management of the Company believes that as of December 31, 2017 it is probable that the Group will realize all of the deferred income tax assets.
As of December 31, 2017, Group’s tax loss carryforwards at the expected recovery rate were as follows:
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Date of generation |
Date of expiration | Jurisdiction | Amount | |||||||||
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2013 |
2018 | Argentina | 65 | |||||||||
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2014 |
2019 | Argentina | 306 | |||||||||
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2015 |
2020 | Argentina | 2,698 | |||||||||
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2016 |
2021 | Argentina | 782 | |||||||||
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2017 |
2022 | Argentina | 2,633 | |||||||||
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| 6,484 | ||||||||||||
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The following deferred tax assets have not been recorded since they do not meet the registration criteria under IFRS:
| • | As of December 31, 2017, there are no recorded significant deferred tax assets. |
| • | As of December 31, 2016, the Group did not record 1,138, corresponding to tax loss carry forwards from subsidiaries, 1,090 of which matured from 2017 onwards and 48 of which had indeterminate maturity. |
| • | As of December 31, 2015, the Group did not record 4,373, 2,041 of which corresponded to non-recoverable taxable temporary differences and 2,332 of which corresponded to tax loss carry forwards from subsidiaries. |
As of December 31, 2017, 2016, and 2015, the Group has classified as deferred tax assets for 588, 564, and 954, respectively, and as deferred tax liability 37,645, 42,465, and 44,812, respectively, all of which arise from the net deferred tax balances of each of the separate companies included in these consolidated financial statements.
As of December 31, 2017, 2016, and 2015, the causes that generate allocations to other comprehensive income, did not create temporary differences for income tax.