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CURRENT AND DEFERRED TAXES

12 Months Ended

Dec. 31, 2018

Major components of tax expense (income) [abstract]

NOTE 18 - CURRENT AND DEFERRED TAXES

In the year ended December 31, 2018, the income tax provision was calculated for such period, applying the partially integrated taxation system and a rate of 27%, in accordance with the Law No. 20,780 published in the Official Journal of the Republic of Chile on September 29, 2014.

The effect in the income statement for deferred tax corresponds to the variation of the year, of the assets and liabilities for deferred taxes generated by temporary differences and tax losses.

There are the permanent differences that give rise to an accounting value of the assets and liabilities other than their tax value, no deferred tax has been recorded since they are caused by transactions that are recorded in the financial statements and that will not affect the expense tax for income tax.

(a)

Current taxes

(a.1)

The composition of the current tax assets is the following:

	Current assets				Non-current assets				Total assets
	As of		As of		As of		As of		As of		As of
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017		2018		2017
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Provisional monthly payments (advances)		48,480		65,257		-		-		48,480		65,257
Other recoverable credits		20,654		12,730		757		17,532		21,411		30,262
Total assets by current tax		69,134		77,987		757		17,532		69,891		95,519

(a.2)

The composition of the current tax liabilities are as follows:

	Current liabilities				Non-current liabilities				Total liabilities
	As of		As of		As of		As of		As of		As of
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017		2018		2017
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Income tax provision		3,738		3,511		-		-		3,738		3,511
Total liabilities by current tax		3,738		3,511		-		-		3,738		3,511

(b)

Deferred taxes

The balances of deferred tax are the following:

	Assets						Liabilities
	As of			As of			As of			As of
Concept	December 31,			December 31,			December 31,			December 31,
	2018			2017			2018			2017
	ThUS$			ThUS$			ThUS$			ThUS$

Depreciation		225,967			210,855			1,225,199			1,401,277
Leased assets		(75,136	)		(103,201	)		508,128			275,142
Amortization		(983	)		(484	)		55,880			54,335
Provisions		(38,303	)		(9,771	)		(75,631	)		690
Revaluation of financial instruments		445			(734	)		458			(4,484	)
Tax losses		170,980			290,973			(1,198,170	)		(1,188,586	)
Intangibles		-			-			351,238			406,536
Others		(9,643	)		(23,617	)		5,019			4,787
Total		273,327			364,021			872,121			949,697

The balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed in the long term.

Movements of Deferred tax assets and liabilities

(a)

From January 1 to December 31, 2016

	Opening			Recognized in			Recognized in			Exchange						Ending
	balance			consolidated			comprehensive			rate						balance
	Assets/(liabilities)			income			income			variation			Others			Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		(1,130,991	)		(241,435	)		-			(3,599	)		-			(1,376,025	)
Leased assets		(251,302	)		14,833			-			(3,289	)		-			(239,758	)
Amortization		(71,164	)		(4,375	)		-			(1,941	)		-			(77,480	)
Provisions		378,537			(149,969	)		921			53,448			(1,568	)		281,369
Revaluation of financial instruments		8,284			28,294			(34,695	)		1,340			-			3,223
Tax losses (*)		1,009,782			304,892			-			14,062			-			1,328,736
Intangibles		(364,314	)		4,131			-			(70,522	)		-			(430,705	)
Others		(13,802	)		(30,185	)		-			22,234			1,214			(20,539	)

Total		(434,970	)		(73,814	)		(33,774	)		11,733			(354	)		(531,179	)

(b)

From January 1 to December 31, 2017

	Opening			Recognized in			Recognized in			Exchange			Ending
	balance			consolidated			comprehensive			rate			balance
	Assets/(liabilities)			income			income			variation			Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		(1,376,025	)		185,282			-			322			(1,190,421	)
Leased assets		(239,758	)		(138,879	)		-			294			(378,343	)
Amortization		(77,480	)		22,486			-			174			(54,820	)
Provisions		281,369			(286,267	)		(785	)		(4,778	)		(10,461	)
Revaluation of financial instruments		3,223			2,417			(1,770	)		(120	)		3,750
Tax losses (*)		1,328,736			152,081			-			(1,257	)		1,479,560
Intangibles		(430,705	)		24,436			-			(267	)		(406,536	)
Others		(20,539	)		(7,547	)		-			(319	)		(28,405	)

Total		(531,179	)		(45,991	)		(2,555	)		(5,951	)		(585,676	)

(c)

From January 1 to December 31, 2018

	Opening			Recognized in			Recognized in			Exchange			Ending
	balance			consolidated			comprehensive			rate			balance
	Assets/(liabilities)			income			income			variation			Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		(1,190,421	)		188,052			-			3,137			(999,232	)
Leased assets		(378,343	)		(207,787	)		-			2,866			(583,264	)
Amortization		(54,820	)		(3,735	)		-			1,692			(56,863	)
Provisions		(10,461	)		92,804			1,567			(46,582	)		37,328
Revaluation of financial instruments		3,750			(2,326	)		(269	)		(1,168	)		(13	)
Tax losses (*)		1,479,560			(98,154	)		-			(12,256	)		1,369,150
Intangibles		(406,536	)		20,000			-			35,298			(351,238	)
Others		(28,405	)		16,853			-			(3,110	)		(14,662	)

Total		(585,676	)		5,707			1,298			(20,123	)		(598,794	)

Deferred tax assets not recognized:	As of		As of
	December 31,		December 31,
	2018		2017
	ThUS$		ThUS$
Tax losses		137,761		81,155
Total Deferred tax assets not recognized		137,761		81,155

Deferred tax assets due to negative tax results are recognized to the extent that the corresponding tax benefit is probable in the future. As a result, as of December 31, 2018, the Company no longer recognizes deferred tax assets for ThUS $ 137,761 (ThUS $ 81,155 as of December 31, 2017) with respect to losses of ThUS $ 447,150 (ThUS $ 247,920 at December 31, 2017), additionally, and after the re-evaluation of the financial and fiscal projections, it has written off during the year ThUS $ 46,492 that were no longer considered recoverable.

Deferred tax expense and current income taxes:

	For the year ended
	December 31,
	2018		2017		2016
	ThUS$		ThUS$		ThUS$

Current tax expense
Current tax expense		77,713		127,024		87,307
Adjustment to previous period’s current tax		362		489		2,083
Total current tax expense, net		78,075		127,513		89,390

Deferred tax expense
Deferred expense for taxes related to the creation and reversal of temporary differences		5,707		45,991		73,814
Total deferred tax expense, net		5,707		45,991		73,814
Income tax expense		83,782		173,504		163,204

Composition of income tax expense (income):

	For the year ended
	December 31,
	2018			2017		2016
	ThUS$			ThUS$		ThUS$

Current tax expense, net, foreign		65,850			100,657		80,600
Current tax expense, net, Chile		12,225			26,856		8,790
Total current tax expense, net		78,075			127,513		89,390
Deferred tax expense, net, foreign		58,271			21,846		119,175
Deferred tax expense, net, Chile		(52,564	)		24,145		(45,361	)
Deferred tax expense, net, total		5,707			45,991		73,814
Income tax expense		83,782			173,504		163,204

Profit before tax by the legal tax rate in Chile (27% and 25.5% at December 31, 2018 and 2017, respectively)

	For the year ended									For the year ended
	December 31,									December 31,
	2018			2017			2016			2018			2017			2016
	ThUS$			ThUS$			ThUS$			%			%			%

Tax expense using the legal rate		80,198			95,425			65,449			27.00			25.50			24.00
Tax effect by change in tax rate		5,587			897			-			1.88			0.24			-
Tax effect of rates in other jurisdictions		3,287			42,326			16,333			1.11			11.31			5.99
Tax effect of non-taxable operating revenues		(3,076	)		(44,593	)		(62,419	)		(1.04	)		(11.92	)		(22.89	)
Tax effect of disallowable expenses		61,295			35,481			132,469			20.64			9.48			48.58
Tax effect of due to the non-use of tax losses		46,492			211			-			15.65			0.06			-
Other increases (decreases) in legal tax charge		(110,001	)		43,757			11,372			(37.03	)		11.69			4.17
Total adjustments to tax expense using the legal rate		3,584			78,079			97,755			1.21			20.86			35.85
Tax expense using the effective rate		83,782			173,504			163,204			28.21			46.36			59.85

Thus, at December 31, 2018 the Company presents the reconciliation of income tax expense and legal tax rate considering the rate increase.

Other increases (decreases) in legal tax charges (US$ 110 millions) mainly includes the effect of the decrease in deferred tax liabilities (US$ 172.9 millions) that occurs at the anticipated end of the financing of aircraft that were in leasing with related companies outside of Chile; and other adjustments for permanent differences in the other group companies (US$ 62.9 millions).

Deferred taxes related to items charged to net equity:

	For the year ended
	December 31,
	2018		2017
	ThUS$		ThUS$

Aggregate deferred taxation of components of other comprehensive income		1,298		(2,555	)