| 27. | Income Tax |
| A. | Income taxes recognized in profit or loss for the years ended December 31, 2015, 2016 and 2017 are as follows: |
| For the Years Ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| NT$ | NT$ | NT$ | ||||||||||
|
Current income tax expense |
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|
Recognition for the current period |
1,741,385 | 1,356,232 | 1,188,463 | |||||||||
|
Provision of additional 10% tax on undistributed earnings |
906,273 | 904,395 | 982,843 | |||||||||
|
Reversal of additional 10% tax on undistributed earnings due to dividend distribution |
(1,056,043 | ) | (788,603 | ) | (904,395 | ) | ||||||
|
Income tax adjustments for prior years |
(39,435 | ) | (6,336 | ) | (6,759 | ) | ||||||
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| 1,552,180 | 1,465,688 | 1,260,152 | ||||||||||
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|
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Deferred income tax expense |
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Temporary differences |
(186,121 | ) | 401,511 | 265,427 | ||||||||
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|
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Income tax expense recognized in profit or loss |
1,366,059 | 1,867,199 | 1,525,579 | |||||||||
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| B. | The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: |
| For the Years Ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| NT$ | NT$ | NT$ | ||||||||||
|
Income tax expense calculated at the statutory tax rates applicable to respective countries |
2,057,890 | 2,300,048 | 1,783,328 | |||||||||
|
Expense disallowed (deductible income) by tax regulation |
319,835 | 113,971 | (13,203 | ) | ||||||||
|
Tax exempt income by tax regulation |
(736,103 | ) | (572,372 | ) | (389,163 | ) | ||||||
|
Temporary difference not recognized as deferred income tax liabilities |
(179,130 | ) | (156,588 | ) | (135,960 | ) | ||||||
|
Change in assessment of realization of deferred income tax assets |
(1,071 | ) | — | — | ||||||||
|
Effect from Alternative Minimum Tax |
88,944 | 72,684 | 32,688 | |||||||||
|
Provision of additional 10% tax on undistributed earnings |
906,273 | 904,395 | 982,843 | |||||||||
|
Adjustment: over provision from prior years |
(1,090,579 | ) | (794,939 | ) | (911,703 | ) | ||||||
|
Deferred tax effect of earnings of subsidiaries |
— | — | 176,749 | |||||||||
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|
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Income tax expense recognized in profit or loss |
1,366,059 | 1,867,199 | 1,525,579 | |||||||||
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The weighted average statutory tax rates applicable to respective countries for the years ended December 31, 2015, 2016 and 2017 were 19.83%, 19.70% and 20.50%, respectively.
Adjustment for over provision from prior years mainly relates to the reversal of additional 10% income tax effect on dividend distribution. Refer to Note 22(I) for more information.
| C. | Income taxes recognized in other comprehensive income for the years ended December 31, 2015, 2016 and 2017 are as follows: |
| For the Years Ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| NT$ | NT$ | NT$ | ||||||||||
|
Unrealized gain/loss on available-for-sale financial assets |
19,610 | 262,359 | (49,661 | ) | ||||||||
|
Share of other comprehensive income of associates |
— | 10,981 | (37,721 | ) | ||||||||
|
Exchange difference on translation of foreign financial statements |
634 | 570 | (194 | ) | ||||||||
|
Remeasurements of post-employment benefit obligation |
30,572 | 30,227 | (1,810 | ) | ||||||||
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| 50,816 | 304,137 | (89,386 | ) | |||||||||
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| D. | Changes in deferred income tax assets and liabilities for the years ended December 31, 2015, 2016 and 2017 are as follows: |
| For the Year Ended December 31, 2015 | ||||||||||||||||||||
| January 1 | Profit or Loss |
Other Comprehensive Income |
Effect of Foreign Currency Exchange Differences |
December 31 | ||||||||||||||||
| NT$ | NT$ | NT$ | NT$ | NT$ | ||||||||||||||||
|
Deferred income tax assets |
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|
Temporary differences |
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|
Unrealized sales allowance |
47,722 | (43,330 | ) | — | (40 | ) | 4,352 | |||||||||||||
|
Convertible bonds |
95,623 | 125,131 | — | — | 220,754 | |||||||||||||||
|
Post-employment benefit obligations |
165,371 | (2,254 | ) | 30,572 | — | 193,689 | ||||||||||||||
|
Unrealized losses on financial liabilities at fair value through profit or loss |
54,610 | 119,572 | — | — | 174,182 | |||||||||||||||
|
Others |
332,786 | (13,352 | ) | 634 | (991 | ) | 319,077 | |||||||||||||
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| 696,112 | 185,767 | 31,206 | (1,031 | ) | 912,054 | |||||||||||||||
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Deferred income tax liabilities |
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Temporary differences |
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|
Unrealized gains on available-for-sale financial assets |
(282,648 | ) | — | 19,610 | — | (263,038 | ) | |||||||||||||
|
Unrealized gains on property, plant and equipment |
(13,567 | ) | (14,828 | ) | — | 697 | (27,698 | ) | ||||||||||||
|
Others |
(60,003 | ) | 15,182 | — | 972 | (43,849 | ) | |||||||||||||
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| (356,218 | ) | 354 | 19,610 | 1,669 | (334,585 | ) | ||||||||||||||
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Net deferred income tax assets |
339,894 | 186,121 | 50,816 | 638 | 577,469 | |||||||||||||||
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| For the Year Ended December 31, 2016 | ||||||||||||||||||||
| January 1 | Profit or Loss |
Other Comprehensive Income |
Effect of Foreign Currency Exchange Differences |
December 31 | ||||||||||||||||
| NT$ | NT$ | NT$ | NT$ | NT$ | ||||||||||||||||
|
Deferred income tax assets |
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|
Temporary differences |
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Unrealized sales allowance |
4,352 | (1,807 | ) | — | (151 | ) | 2,394 | |||||||||||||
|
Convertible bonds |
220,754 | 11,828 | — | — | 232,582 | |||||||||||||||
|
Post-employment benefit obligations |
193,689 | 19,610 | 30,227 | — | 243,526 | |||||||||||||||
|
Unrealized losses on financial liabilities at fair value through profit or loss |
174,182 | (174,182 | ) | — | — | — | ||||||||||||||
|
Others |
319,077 | (43,697 | ) | 570 | (1,740 | ) | 274,210 | |||||||||||||
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| 912,054 | (188,248 | ) | 30,797 | (1,891 | ) | 752,712 | ||||||||||||||
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Deferred income tax liabilities |
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Temporary differences |
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Unrealized gains on available-for-sale financial assets |
(263,038 | ) | (139,835 | ) | 262,359 | — | (140,514 | ) | ||||||||||||
|
Unrealized gains on property, plant and equipment |
(27,698 | ) | (39,646 | ) | — | 4,828 | (62,516 | ) | ||||||||||||
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Others |
(43,849 | ) | (33,782 | ) | 10,981 | 5,320 | (61,330 | ) | ||||||||||||
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| (334,585 | ) | (213,263 | ) | 273,340 | 10,148 | (264,360 | ) | |||||||||||||
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Net deferred income tax assets |
577,469 | (401,511 | ) | 304,137 | 8,257 | 488,352 | ||||||||||||||
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| For the Year Ended December 31, 2017 | ||||||||||||||||||||
| January 1 | Profit or Loss |
Other Comprehensive Income |
Effect of Foreign Currency Exchange Differences |
December 31 | ||||||||||||||||
| NT$ | NT$ | NT$ | NT$ | NT$ | ||||||||||||||||
|
Deferred income tax assets |
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Temporary differences |
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|
Convertible bonds |
232,582 | (120,794 | ) | — | — | 111,788 | ||||||||||||||
|
Post-employment benefit obligations |
243,526 | (12,559 | ) | (1,810 | ) | — | 229,157 | |||||||||||||
|
Unrealized losses on inventories |
50,380 | 19,594 | — | (231 | ) | 69,743 | ||||||||||||||
|
Provisions |
70,678 | (29,175 | ) | — | — | 41,503 | ||||||||||||||
|
Compensated absences payable |
69,876 | 3,469 | — | (36 | ) | 73,309 | ||||||||||||||
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Others |
85,670 | 30,536 | (26,935 | ) | (38 | ) | 89,233 | |||||||||||||
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| 752,712 | (108,929 | ) | (28,745 | ) | (305 | ) | 614,733 | |||||||||||||
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Deferred income tax liabilities |
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Temporary differences |
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Gains from investment for using equity method |
— | (176,749 | ) | — | — | (176,749 | ) | |||||||||||||
|
Unrealized gains on available-for-sale financial assets |
(140,514 | ) | (21,291 | ) | (49,660 | ) | — | (211,465 | ) | |||||||||||
|
Unrealized gains on property, plant and equipment |
(62,516 | ) | 1,864 | — | 1,219 | (59,433 | ) | |||||||||||||
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Others |
(61,330 | ) | 39,678 | (10,981 | ) | 697 | (31,936 | ) | ||||||||||||
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| (264,360 | ) | (156,498 | ) | (60,641 | ) | 1,916 | (479,583 | ) | ||||||||||||
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Net deferred income tax assets |
488,352 | (265,427 | ) | (89,386 | ) | 1,611 | 135,150 | |||||||||||||
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| E. | Unrecognized deferred income tax liabilities relating to the taxable temporary differences for investments in foreign subsidiaries are: |
| As of December 31, | ||||||||
| 2016 | 2017 | |||||||
| NT$ | NT$ | |||||||
|
Investment in foreign subsidiaries |
6,693,787 | 7,266,412 | ||||||
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| F. | The Company has met the requirement of “Incentives for Emerging Important Strategic Industries in Manufacturing and Technology Services” for its capitalization plans in 2007 and is exempted from income tax for revenues arising from the assembly and testing of certain integrated circuit products for a five-year period from 2015. The Company selected 2015 as the starting periods of the five-year income tax exemptions will expire in December 2019. As a result of the above tax holiday, the net income was higher by $488,100 ($0.16 dollars per share), $354,353 ($0.11 dollars per share) for the years ended December 31, 2016 and 2017, respectively. |
| G. | The income tax returns of the Company have been assessed and approved by the Tax Authority through 2015. |
| H. | According to the amended Enterprise Income Tax Law of the Peoples’ Republic of China, the tax rate adopted in subsidiary, Siliconware Technology (Suzhou) Limited and Siliconware Electronics (Fujian) Co., Limited is 25%. |