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INCOME TAX
12 Months Ended
Dec. 31, 2021
Disclosure of income tax [abstract]  
INCOME TAX

NOTE 19 – INCOME TAX

19.1          Components of the income tax expense:

The income tax expense for the years ended on December 31, 2021, 2020 and 2019 comprises the following:

    

December 31,

    

December 31,

    

December 31,

2021

2020

2019

Current period income tax

 

Ps.

1,660,815

  

Ps.

1,592,062

  

Ps.

1,564,056

Income tax surcharge (1)

 

  

60,730

  

84,621

  

Subtotal current period taxes

 

Ps.

1,721,545

  

Ps.

1,676,683

  

Ps.

1,564,056

Prior years adjustments (2)

 

  

(103,464)

  

(52,539)

  

(16,931)

Adjustment due to settlement of uncertain tax positions from prior years (3)

 

  

(69,442)

  

8,539

  

(22,113)

Deferred taxes

Deferred taxes current period

 

  

1,268,583

  

203,093

  

647,718

Deferred taxes - Prior years adjustments (4)

34,573

7,892

(86,473)

Subtotal deferred taxes

 

Ps.

1,303,156

  

Ps.

210,985

  

Ps.

561,245

Total

 

Ps.

2,851,795

  

Ps.

1,843,668

  

Ps.

2,086,257

(1)The income tax surcharge applicable to financial entities was declared unconstitutional for the year 2019.
(2)In 2021, current tax recovery was recorded in Banco de Occidente for Ps. (71,282), Banco de Bogotá for Ps. (12,888), Corficolombiana for Ps. (10,185) and other entities for Ps. (9,108); the most important effect is registered from Banco de Occidente corresponds to the impact of the fiscal realization of derivative contracts that was adjusted with the presentation of income tax return of the year 2020.
(3)In 2021, BAC Credomatic recovery provisions for uncertainties for Ps. (71,638). Also, Banco Av Villas and Banco de Occidente recorded Ps. 2,196.
(4)In 2021, Banco de Occidente recorded an adjustment to prior year expenses of Ps. 59,825 associated with the fiscal adjustments to derivative contracts. In 2019, adjustments were recorded in connection with a deferred tax reversal on the property, plant and equipment, which had been subject to a tax base update in accordance with the rules of the Normalization (Amnesty) tax. Banco de Occidente recorded a recovery of Ps. (63,849) and Banco Popular of Ps. (24,914).

19.2          Reconciliation of the Nominal Tax Rate and the Effective tax Rate:

The following are the existing legal provisions related to income tax:

In Colombia

The tax rules in relation to the income tax applicable during the years 2021, 2020 and 2019, among other things, establish the following:

The income tax rate to be 31% plus an income tax surcharge of 3% applicable to financial institutions in 2021, 32% plus an income tax surcharge of 4% applicable to financial institutions in 2020 and 33% in 2019. The income tax surcharge stipulated for 2019 was declared unconstitutional by the Constitutional Court of Colombia through Judgment C-510 of October 2019.

Gains on the sale or disposal of non-current assets held for more than two years is taxed at 10%.
Gains of the entities that belong to the special free zone regime in Colombia is taxed at 20%.

The tax rate on presumptive income is calculated to 0.5% in the years 2020, 1.5% in the year 2019 and 3.5% in the years 2018.
In 2020 and 2019, an income tax discount of 50% of the industry and commerce tax paid in the taxable period can be applied. This discount will increase to 100% in 2022.

Tax loss-carry forwards incurred prior to 2017 may be offset on the same terms applicable for 2016, but they may not be fiscally readjusted. Tax loss carry-forwards incurred since 2017 may be offset against company taxable income over the following twelve years.
The “presumptive income” incurred prior to 2017 may be offset on the same terms applicable for 2016, but they may not be fiscally readjusted.  The “presumptive income” incurred since 2017 may be offset by taxable income over the following five years.

As of 2017 the companies’ taxable income will be determined based on the new accounting regulation in force in Colombia since January 1, 2015. However, the new tax regulation also includes special income tax rules for several transactions.

The last tax reform that is in force at the time of preparation of these Financial Statements is Law 2155 of 2021. This Law, includes among others:

An income tax rate of 35% that applies to companies from 2022 onwards. In addition, financial institutions in Colombia with a taxable income equal to or greater than 120,000 Units of Tax Value - UVT (which by 2022 equals 36,308 pesos), are subject to a 3% income tax surcharge in 2022, 2023, 2024 and 2025.

An income tax discount of 50% of the industry and commerce tax paid in the taxable period. This eliminated the increase of this discount to 100% starting on in 2022, that was included in previous reforms.
The audit benefit is extended for taxpayers that increase their net income tax of the taxable year relative to the net income tax of the immediately preceding year by at least 35% or 25%, limiting the tax authority's right to examine the income tax to 6 or 12 months from the date of its filing, respectively.
The expiration of a tax authority's right to examine the income tax will be five years after the filing date for taxpayers that declare or compensate tax losses or that are subject to the transfer pricing regime.

In other countries

Given that our subsidiary BAC Holding  has an international license in Panamá it is  subject to a tax rate of 0%. The subsidiaries in Guatemala are taxed at a rate of 25%; the subsidiaries in El Salvador, Honduras, Costa Rica and Nicaragua are taxed at a rate of 30% and the subsidiaries with a local license in Panamá are taxed at a rate of 25%. The subsidiaries in Perú are taxed at a rate of 29.5% since 2017.

Below is the detailed reconciliation between total expenses of the income tax of Grupo Aval calculated at the applicable enacted tax rate and the tax expense recognized in the statement of income for the years ended on December 31, 2021, 2020 and 2019:

Years ended on:

 

    

December 31,

    

December 31,

    

December 31,

 

2021

2020

2019

 

Profit before income tax

 

Ps.

8,520,297

 

Ps.

6,475,284

 

Ps.

7,451,711

Enacted tax rate in Colombia

 

  

34

%  

36

%  

33

%

Theoretical income tax expense

 

  

2,896,901

  

2,331,102

  

2,459,065

Nondeductible expenses

 

  

414,045

  

613,118

  

484,615

Tax losses considered non recoverable for income tax purpose

 

  

9,480

  

39,843

  

54,698

Presumptive income considered non recoverable for income tax purpose

 

  

(7,845)

  

(5,074)

  

7,071

Nontaxable dividends

 

  

(54,102)

  

(31,770)

  

(24,172)

Nontaxable income under equity method in associates

 

  

(102,073)

  

(79,258)

  

(69,399)

Profit (loss) on sales or appraisal of investment

 

  

(695)

  

2,492

  

(1,167)

Nontaxable interest income and other income

 

  

(274,704)

  

(86,195)

  

(19,088)

Other nontaxable income

 

  

(208,030)

  

(386,496)

  

(339,253)

Revenues taxable at different tax rate

 

  

1,453

  

5,511

  

(5,851)

Tax benefits in the acquisition of property and equipment

 

  

(22,431)

  

(25,470)

  

(42,375)

Tax Discounts (1)

(91,830)

(111,165)

(80,742)

Profits (losses) in Subsidiaries in tax free countries or with different tax rate

 

  

(265,374)

  

(422,894)

  

(116,155)

Effect on the deferred income tax due to changes in tax rates (2)

 

  

587,938

  

(102,617)

  

(129,172)

Prior year adjustments

 

  

(103,464)

  

(52,539)

  

(16,931)

Adjustments due to uncertain tax positions in previous year

 

  

(69,442)

  

8,539

  

(22,113)

Deferred taxes - Prior years adjustments

34,573

7,892

(86,473)

With holding tax (3)

113,958

134,167

Other

 

  

(6,563)

  

4,482

  

33,699

Total tax expense of the year

 

Ps.

2,851,795

  

Ps.

1,843,668

  

Ps.

2,086,257

Effective income tax rate

 

  

33.47

%  

28.47

%  

28.00

%

(1)Corresponds to the industry and commerce tax that during 2019 could be used as a tax discount under Law 1943 of 2018. Banco de Bogotá recorded Ps. 47,155, Banco de Occidente Ps. 7,068, Banco Popular Ps. 6,257, Banco AV Villas Ps. 10,444, Corficolombiana Ps. 8,498 and Grupo Aval Holding Ps. 1,230.
(2)Corresponds to the effect of the difference in rate applied by entities with respect to the statutory rate of 36%. Banco Bogotá records an effect of Ps. 262,901 explained by the differential rates of BAC Holding and subsidiaries. Corficolombiana records an effect of Ps. 133,329 explained by their subsidiaries that are not subject to the 4% income tax surcharge rate. Other entities contribute Ps. 7,611.
(3)Expenditure for withholdings at source assumed in investments in Central America and recorded by LB Panamá. The country that contributes the most is Costa Rica, over which during 2020 it registered Ps.87,919.

19.3          Tax Losses and excess of Presumptive Income:

The following table shows the detail of the tax loss carry forward and excess of presumptive income over taxable income of the entities of Grupo Aval which are not recognized as deferred tax assets, as of December 31, 2021 and 2020.

    

December 31, 

    

December 31, 

2021

2020

Tax loss carry forwards expiring on:

 

  

  

  

December 31, 2024

 

Ps.

  

Ps.

13

December 31, 2025

 

  

6

  

23

December 31, 2026

 

  

  

904

December 31, 2029

 

  

170,944

  

175,081

December 31, 2030

284,105

298,235

December 31, 2031

233,232

244,574

December 31, 2032

 

  

14,363

  

112,786

December 31, 2033

31,262

5,715

December 31, 2034

433,022

4,443

December 31, 2035

3,575

3,082

December 31, 2036

3,291

2,838

Without expiration date

 

  

2,161

  

432,676

Subtotal

 

Ps.

1,175,961

  

Ps.

1,280,371

Excess of presumptive income expiring on:

 

  

  

December 31, 2022

 

Ps.

46,745

  

Ps.

59,128

December 31, 2023

 

  

52,538

  

46,894

December 31, 2024

 

  

27,191

  

55,195

December 31, 2025

 

  

9,132

  

27,222

December 31, 2026

 

  

  

9,469

Subtotal

 

Ps.

135,606

  

Ps.

197,908

Total

 

Ps.

1,311,567

  

Ps.

1,478,279

19.4          Deferred Taxes from Investments in Subsidiaries:

Grupo Aval did not record income tax liabilities related to temporary differences on investment subsidiaries of Ps. 13,081,990 and Ps. 10,770,417 as of December 31, 2021 and 2020, respectively. These were not recognized because Grupo Aval controls the dividend policy of its subsidiaries and is able to control the timing of reversal of the related taxable temporary differences and Grupo Aval does not expect to reverse them in the foreseeable future.

19.5          Deferred taxes by Type of Temporary Difference:

The differences between the carrying value of the assets and liabilities and their tax bases give rise to the following temporary differences which result in deferred taxes, calculated and recorded in the years ended on December 31, 2021, 2020 and 2019, based on current tax regulations as references for the years wherein such temporary differences will be reverted:

Year ended on December 31, 2021

    

Balance as of

    

Credited

    

Credited

    

Foreign exchange

    

Balance as of

January 1,

(charged) to

(charged) to

adjustments and

December 31, 

2021

profit or loss

OCI

reclassiffications

2021

Deferred tax assets

 

  

 

  

 

  

 

  

 

  

Debt securities at fair value

 

Ps.

28,230

Ps.

21,386

Ps.

350,014

Ps.

(14,292)

Ps.

385,338

Equity securities at fair value

 

275

 

753

 

 

 

1,028

Derivative instruments

 

609,930

 

(216,846)

 

308,831

 

(2,604)

 

699,311

Allowance of investments securities

 

562

 

593

 

 

 

1,155

Accounts receivable

45,324

101,221

(49)

146,496

Allowance for accounts receivable

 

47,181

 

12,423

 

 

 

59,604

Loans and receivables

 

3,623

 

(29)

 

 

(2,437)

 

1,157

Allowance for impairment on loans and receivables

 

448,793

 

54,939

 

 

58,998

 

562,730

Allowance for foreclosed assets

 

10,169

 

8,758

 

 

2,155

 

21,082

Property, plant and equipment costs

 

323,544

 

15,505

 

 

 

339,049

Depreciation of property, plant and equipment

 

32,154

 

2,401

 

 

59

 

34,614

Investment property

 

25,461

 

4,481

 

79

 

 

30,021

Deferred charges and of intangible assets

 

214,669

 

28,501

 

 

 

243,170

Tax losses carry forward

 

86,558

 

38,949

 

 

(8,482)

 

117,025

Surplus of presumptive income

 

6,071

 

(1,720)

 

 

 

4,351

Provisions

 

220,822

 

98,893

 

 

4,348

 

324,063

Employee benefits

 

123,700

 

(4,375)

 

(19,635)

 

2,972

 

102,662

Goodwill

 

423

 

(423)

 

 

 

Financial assets in concession contracts

884,158

484,332

1,368,490

Biological assets

104

(3)

101

Lease agreements

609,701

56,007

27,680

693,388

Other

 

444,708

 

186,995

 

441,257

(36,004)

 

1,036,956

Subtotal

 

Ps.

4,166,160

 

Ps.

892,741

 

Ps.

1,080,546

 

Ps.

32,344

 

Ps.

6,171,791

 

 

 

 

 

Deferred tax liabilities

Debt securities at fair value

 

Ps.

(111,742)

 

Ps.

9,262

Ps.

(3,767)

Ps.

32,352

 

Ps.

(73,895)

Equity securities at fair value

 

(203,826)

(17,437)

(20,075)

(12,084)

(253,422)

Derivative instruments

 

(13,194)

 

(15,724)

(3,722)

(28)

 

(32,668)

Accounts receivable

(115,071)

(62,571)

(177,642)

Allowance of investments securities

 

(1,805)

 

384

 

(1,421)

Loans and receivables

(27,042)

(2,489)

(29,531)

Allowance for impairment on loans and receivables

 

(399,561)

 

(193,833)

(19,531)

 

(612,925)

Foreclosed assets

 

(60,161)

 

(5,006)

 

(65,167)

Provision for foreclosed assets

 

(10,388)

 

(4,206)

(1,927)

 

(16,521)

Property plant and equipment costs

 

(270,327)

 

(3,460)

(9,806)

 

(283,593)

Depreciation of property, plant and equipment

 

(338,964)

 

(71,262)

 

(410,226)

Investment property

 

(79,571)

 

(16,694)

(77)

 

(96,342)

Right-of-use

 

(422,659)

 

1,526

(16,036)

 

(437,169)

Deferred charges and of intangible assets

 

(263,802)

 

(53,515)

(3,589)

 

(320,906)

Provisions

 

(21,766)

 

7,562

(2,338)

 

(16,542)

Employee benefits

(30,851)

(8,943)

3,686

(5,259)

(41,367)

Goodwill

(253,223)

(73,847)

(327,070)

Deferred Income

(638,438)

(278,721)

(917,159)

Financial assets in concession arrangements

(149,928)

(25,404)

(175,332)

Intangible assets in concession arrangements

(2,537,348)

 

(1,451,262)

(6,367)

(3,994,977)

Biological assets

 

(31,194)

 

(14,633)

 

(45,827)

Lease agreements

(279,347)

(29,017)

(9,175)

(317,539)

Other

 

(226,224)

 

113,393

(2,651)

23,831

 

(91,651)

Subtotal

 

Ps.

(6,486,432)

 

Ps.

(2,195,897)

 

Ps.

(26,529)

 

Ps.

(30,034)

 

Ps.

(8,738,892)

Total

 

Ps.

(2,320,272)

 

Ps.

(1,303,156)

 

Ps.

1,054,017

 

Ps.

2,310

 

Ps.

(2,567,101)

Year ended on December 31, 2020

    

Balance as of

    

Change in

    

Credited

    

Credited

    

 

Balance as of

January 1,

accounting

(charged) to

(charged) to

Foreign exchange

 

December 31, 

2020

policies

profit or loss

OCI

adjustments

 

2020

Deferred tax assets

  

  

  

  

  

  

Debt securities at fair value

Ps.

11,274

Ps.

26,312

Ps.

1,776

Ps.

(117)

Ps.

(11,015)

Ps.

28,230

Equity securities at fair value

365

 

 

(667)

 

577

 

 

275

Derivative instruments

156,543

 

 

136,061

 

317,271

 

55

 

609,930

Allowance of investments securities

173

 

 

389

 

 

 

562

Accounts receivable

147

45,180

(3)

45,324

Allowance for accounts receivable

50,144

 

 

(2,963)

 

 

 

47,181

Loans and receivables

1,650

 

117,600

 

(117,519)

 

 

1,892

 

3,623

Allowance for impairment on loans and receivables

212,223

 

8,495

 

218,844

 

 

9,231

 

448,793

Allowance for foreclosed assets

1,856

 

 

8,908

 

 

(595)

 

10,169

Property, plant and equipment costs

304,768

 

(2,305)

 

19,812

 

 

1,269

 

323,544

Depreciation of property, plant and equipment

36,083

 

 

(3,908)

 

 

(21)

 

32,154

Investment property

18,323

 

 

7,138

 

 

 

25,461

Deferred charges and of intangible assets

99,584

 

(29,258)

 

117,615

 

 

26,728

 

214,669

Tax losses carry forward

56,516

 

26,041

 

3,132

 

 

869

 

86,558

Surplus of presumptive income

5,661

 

 

410

 

 

 

6,071

Provisions

223,238

 

2,911

 

(7,584)

 

 

2,257

 

220,822

Employee benefits

120,367

 

(1,219)

 

3,608

 

437

 

507

 

123,700

Goodwill

859

 

 

(436)

 

 

 

423

Financial assets in concession contracts

247,883

636,275

884,158

Biological assets

220

(2)

(114)

104

Lease agreements

586,879

10,592

1,451

10,779

609,701

Other

285,468

 

 

69,257

 

100,825

 

(10,842)

 

444,708

Subtotal

Ps.

2,420,224

 

Ps.

159,169

 

Ps.

1,136,777

 

Ps.

418,879

 

Ps.

31,111

 

Ps.

4,166,160

Deferred tax liabilities

  

  

  

  

  

  

Debt securities at fair value

Ps.

(75,114)

 

Ps.

Ps.

(27,361)

Ps.

(18,286)

Ps.

9,019

 

Ps.

(111,742)

Equity securities at fair value

(105,502)

(116,654)

(411)

18,741

(203,826)

Derivative instruments

(7,264)

 

(8,734)

2,740

64

 

(13,194)

Accounts receivable

(92,100)

(22,971)

(115,071)

Allowance of investments securities

(85,584)

 

83,779

 

(1,805)

Loans and receivables

(38,086)

308

10,736

(27,042)

Allowance for impairment on loans and receivables

(432,707)

 

(52,429)

144,414

(58,839)

 

(399,561)

Foreclosed assets

(90,276)

 

30,115

 

(60,161)

Provision for foreclosed assets

(8,611)

 

(1,472)

(305)

 

(10,388)

Property plant and equipment costs

(294,303)

 

(3,788)

30,070

(2,306)

 

(270,327)

Depreciation of property, plant and equipment

(265,505)

 

(73,426)

(33)

 

(338,964)

Investment property

(70,065)

 

(99)

(8,617)

(532)

(258)

 

(79,571)

Right-of-use

(494,923)

 

(16,274)

100,038

(11,500)

 

(422,659)

Deferred charges and of intangible assets

(82,082)

 

(132,822)

(48,898)

 

(263,802)

Provisions

(9,408)

 

(515)

(11,843)

 

(21,766)

Employee benefits

(27,492)

(3,397)

1,078

(1,040)

(30,851)

Goodwill

(222,513)

(30,710)

(253,223)

Deferred Income

(127,223)

(511,215)

(638,438)

Financial assets in concession arrangements

(189,897)

39,969

(149,928)

Intangible assets in concession arrangements

(1,890,875)

(646,473)

(2,537,348)

Biological assets

(27,704)

 

(3,490)

 

(31,194)

Lease agreements

(231,167)

(48,180)

(279,347)

Other

(176,534)

 

(140,418)

11,429

79,299

 

(226,224)

Subtotal

Ps.

(5,044,935)

Ps.

(72,590)

Ps.

(1,347,762)

Ps.

(3,982)

Ps.

(17,163)

Ps.

(6,486,432)

Total

Ps.

(2,624,711)

Ps.

86,579

Ps.

(210,985)

Ps.

414,897

Ps.

13,948

Ps.

(2,320,272)

Year ended on December 31, 2019

    

Balance as of

    

Change in

Credited

    

Credited

    

Balance as of

January 1,

accounting

(charged) to

(charged) to

Foreign exchange

December 31, 

2019

policies

profit or loss

OCI

adjustments

2019

Deferred tax assets

 

  

 

  

  

 

  

 

  

  

Debt securities at fair value

 

Ps.

29,650

Ps.

Ps.

(14,680)

Ps.

(4,540)

Ps.

844

Ps.

11,274

Equity securities at fair value

 

622

 

 

(1,129)

 

872

 

 

365

Derivative instruments

 

73,154

 

 

68,038

 

15,351

 

 

156,543

Allowance of investments securities

 

136

 

 

37

 

 

 

173

Accounts receivable

 

147

147

Allowance for accounts receivable

 

41,390

 

 

8,750

 

 

4

 

50,144

Loans and receivables

 

14,917

 

 

(13,440)

 

 

173

 

1,650

Allowance for impairment on loans and receivables

 

159,169

 

 

54,517

 

 

(1,463)

 

212,223

Allowance for foreclosed assets

 

2,927

 

 

(1,203)

 

 

132

 

1,856

Property, plant and equipment costs

 

284,111

 

 

16,749

 

 

3,908

 

304,768

Depreciation of property, plant and equipment

20,903

 

 

15,180

 

 

 

36,083

Investment property

 

 

 

18,323

 

 

 

18,323

Deferred charges and of intangible assets

 

168,856

 

 

(69,272)

 

 

 

99,584

Tax losses carry forward

 

299,201

 

 

(24,518)

 

(240,420)

 

22,253

 

56,516

Surplus of presumptive income

 

4,670

 

 

991

 

 

 

5,661

Provisions

 

189,882

 

 

35,111

 

 

(1,755)

 

223,238

Employee benefits

 

131,783

 

 

(27,270)

 

15,308

 

546

 

120,367

Goodwill

 

 

 

859

 

 

 

859

Deferred Income

 

2,587

 

 

(2,587)

 

 

 

Financial assets in concession contracts

 

158,645

89,238

247,883

Biological assets

104

282

(166)

220

Lease agreements

8,592

649,307

(74,500)

3,480

586,879

Other

 

271,950

 

 

(3,989)

 

18,102

 

(595)

 

285,468

Subtotal

 

Ps.

1,863,249

Ps.

649,307

Ps.

75,633

Ps.

(195,492)

Ps.

27,527

Ps.

2,420,224

 

Deferred tax liabilities

 

  

  

  

  

  

  

Debt securities at fair value

 

Ps.

(49,937)

 

Ps.

Ps.

43,565

Ps.

(65,399)

Ps.

(3,343)

 

Ps.

(75,114)

Equity securities at fair value

 

(115,877)

20,716

(10,773)

432

(105,502)

Derivative instruments

(17,565)

 

17,410

(10,272)

3,163

 

(7,264)

Accounts receivable

 

(287,526)

195,426

(92,100)

Allowance of investments securities

 

(23,150)

 

(62,434)

 

(85,584)

Loans and receivables

(63,567)

25,769

(288)

(38,086)

Allowance for impairment on loans and receivables

 

(270,947)

 

(163,948)

2,188

 

(432,707)

Foreclosed assets

 

(92,416)

 

2,140

 

(90,276)

Provision for foreclosed assets

 

(109,092)

 

100,172

309

 

(8,611)

Property plant and equipment costs

 

(357,384)

 

54,139

8,942

 

(294,303)

Depreciation of property, plant and equipment

 

(170,138)

 

(86,092)

(9,275)

 

(265,505)

Investment property

 

 

(69,732)

(333)

 

(70,065)

Right-of-use

 

 

(636,017)

144,618

(3,524)

 

(494,923)

Deferred charges and of intangible assets

 

(621,878)

 

539,796

 

(82,082)

Provisions

 

(24,280)

 

21,285

(6,413)

 

(9,408)

Employee benefits

 

(28,020)

322

206

(27,492)

Goodwill

 

(193,030)

(29,483)

(222,513)

Deferred Income

(116,034)

(11,189)

(127,223)

Financial assets in concession arrangements

(554,608)

364,711

(189,897)

Intangible assets in concession arrangements

(344,133)

(1,546,742)

(1,890,875)

Biological assets

(23,333)

 

(4,371)

 

(27,704)

Lease agreements

(4,293)

(226,874)

(231,167)

Other

 

(243,665)

 

62,260

(1,235)

6,106

 

(176,534)

Subtotal

 

Ps.

(3,682,853)

 

Ps.

(636,017)

Ps.

(636,878)

 

Ps.

(87,690)

 

Ps.

(1,497)

Ps.

(5,044,935)

Total

 

Ps.

(1,819,604)

 

Ps.

13,290

Ps.

(561,245)

 

Ps.

(283,182)

 

Ps.

26,030

Ps.

(2,624,711)

Grupo Aval offsets deferred tax assets and liabilities by entity and tax authority, considering the application of the tax provisions in Colombia and other countries in which the legal right to offset tax assets and liabilities and other requirements in IAS 12, according to the following breakdown:

    

Gross Deferred tax

    

    

Balances on Statement

December 31, 2021

amounts

Offset

of financial position

Deferred tax asset

 

Ps.

6,171,791

  

Ps.

(4,406,526)

    

Ps.

1,765,265

Deferred tax liability

 

  

(8,738,892)

  

4,406,526

 

(4,332,366)

Net

 

Ps.

(2,567,101)

  

Ps.

 

Ps.

(2,567,101)

    

Gross Deferred tax

    

    

Balances on Statement

December 31, 2020

amounts

Offset

of financial position

Deferred tax asset

 

Ps.

4,166,160

  

Ps.

(3,304,458)

    

Ps.

861,702

Deferred tax liability

 

  

(6,486,432)

  

3,304,458

 

(3,181,974)

Net

 

Ps.

(2,320,272)

  

Ps.

 

Ps.

(2,320,272)

Grupo Aval estimates to recover its income tax assets and settle its income tax liabilities as shown below:

Deferred tax

December 31, 2021

December 31, 2020

Deferred tax asset recoverable before 12 months

Ps.

1,498,125

Ps.

686,568

Deferred tax asset recoverable after 12 months

4,673,666

3,479,592

Total Deferred tax asset

Ps.

6,171,791

Ps.

4,166,160

Deferred tax liability to settle before 12 months

Ps.

(983,821)

Ps.

(1,002,096)

Deferred tax liability to settle after 12 months

(7,755,071)

(5,484,336)

Total Deferred tax liability

Ps.

(8,738,892)

Ps.

(6,486,432)

Current tax

December 31, 2021

December 31, 2020

Current tax asset recoverable before 12 months

Ps.

1,195,641

Ps.

871,780

Current tax asset recoverable after 12 months

87,997

433,522

Total Current tax asset

Ps.

1,283,638

Ps.

1,305,302

Current tax liability to settle before 12 months

Ps.

(775,108)

Ps.

(704,197)

Current tax liability to settle after 12 months

(48,470)

(71,126)

Total Current tax liability

Ps.

(823,578)

Ps.

(775,323)

19.6          Effect of the current and deferred taxes in each component of other comprehensive income in equity:

The effects of the current and deferred taxes in each component of other comprehensive income are detailed below during the years ended on December 31, 2021, 2020 and 2019:

December 31, 2021

Current

Deferred

tax

tax

Amount

(expense)

(expense)

Items that will be reclassified to profit or loss

    

before taxes

    

Income

income

    

Net

Hedging of net investments in foreign subsidiaries operations

Ps.

2,565,637

  

Ps.

Ps.

(2,292)

  

Ps.

2,563,345

Hedging derivatives in foreign currency

  

(403,983)

  

  

  

275,834

  

  

(128,149)

Hedging financial liabilities in foreign currency

  

(1,198,919)

  

  

  

476,463

  

  

(722,456)

Cash Flow hedging

 

  

7,980

  

  

  

(3,382)

  

  

4,598

Foreign currency translation differences for foreign operations

 

  

(180,798)

  

  

  

(14,946)

  

  

(195,744)

Investment in associates and join ventures

 

  

(846)

  

  

  

(228)

  

  

(1,074)

Debt financial instruments

 

  

(1,346,315)

  

  

  

357,814

  

  

(988,501)

Subtotal Items that will be reclassified to profit or loss

Ps.

(557,244)

  

Ps.

Ps.

1,089,263

  

Ps.

532,019

Items that will not be reclassified to profit or loss

Effect of moving investment properties for own use

Ps.

4,718

Ps.

Ps.

79

Ps.

4,797

Equity financial instruments

 

(110,397)

  

  

(19,376)

  

  

(129,773)

Actuarial gains (losses) from defined benefit pension plans

 

  

61,665

  

  

  

(15,949)

  

  

45,716

Subtotal Items that will not be reclassified to profit or loss

Ps.

(44,014)

Ps.

Ps.

(35,246)

Ps.

(79,260)

Total “other comprehensive income” during the period

 

Ps.

(601,258)

  

Ps.

Ps.

1,054,017

  

Ps.

452,759

December 31, 2020

Current

Deferred

tax

tax

Amount

(expense)

(expense)

Items that will be reclassified to profit or loss

    

before taxes

    

Income

    

income

    

Net

Hedging of net investments in foreign subsidiaries operations

Ps.

883,022

  

Ps.

    

Ps.

(563)

  

Ps.

882,459

Hedging derivatives in foreign currency

  

(1,034,816)

  

  

  

310,445

  

  

(724,371)

Hedging financial liabilities in foreign currency

  

(366,195)

  

  

  

110,668

  

  

(255,527)

Cash Flow hedging

 

  

832

  

  

  

641

  

  

1,473

Foreign currency translation differences for foreign operations

 

  

(548,706)

  

  

  

11,484

  

  

(537,222)

Investment in associates and joint ventures

 

  

13,059

  

  

42,284

  

(869)

  

  

54,474

Debt financial instruments

 

  

172,906

  

  

  

(22,085)

  

  

150,821

Subtotal Items that will be reclassified to profit or loss

Ps.

(879,898)

  

Ps.

42,284

Ps.

409,721

  

Ps.

(427,893)

Items that will not be reclassified to profit or loss

Asset revaluation

Ps.

9,014

Ps.

Ps.

(765)

Ps.

8,249

Equity financial instruments

 

193,880

  

  

4,425

  

  

198,305

Actuarial gains (losses) from defined benefit pension plans

 

  

(9,488)

  

  

  

1,516

  

  

(7,972)

Subtotal Items that will not be reclassified to profit or loss

Ps.

193,406

Ps.

Ps.

5,176

Ps.

198,582

Total “other comprehensive income” during the period

 

Ps.

(686,492)

  

Ps.

42,284

Ps.

414,897

  

Ps.

(229,311)

December 31, 2019

    

    

Current

    

Deferred

    

tax

tax

Amount

(expense)

(expense)

Items that will be reclassified to profit or loss

before taxes

Income

income

Net

Hedging of net investments in foreign subsidiaries operations

 

Ps.

95,329

  

Ps.

    

Ps.

145

  

Ps.

95,474

Hedging derivatives in foreign currency

 

  

(50,318)

  

  

  

18,221

  

  

(32,097)

Hedging financial liabilities in foreign currency

 

  

(47,942)

  

  

247,153

  

(229,627)

  

  

(30,416)

Cash Flow hedging

 

  

13,469

  

  

  

(4,988)

  

  

8,481

Foreign currency translation differences for foreign operations

 

  

128,135

  

  

  

(1,235)

  

  

126,900

Debt financial instruments

 

  

(9,061)

  

  

  

  

  

(9,061)

Investment in associates and joint ventures

 

  

426,300

  

  

  

(69,707)

  

  

356,593

Subtotal Items that will be reclassified to profit or loss

Ps.

555,912

Ps.

247,153

Ps.

(287,191)

Ps.

515,874

Items that will not be reclassified to profit or loss

Asset revaluation

Ps.

5,288

Ps.

Ps.

(333)

Ps.

4,955

Equity financial instruments

 

237,781

  

  

(11,288)

  

226,493

Actuarial gains (losses) from defined benefit pension plans

 

  

(61,222)

  

  

  

15,630

  

  

(45,592)

Subtotal Items that will not be reclassified to profit or loss

Ps.

181,847

Ps.

Ps.

4,009

Ps.

185,856

Total “other comprehensive income” during the period

 

Ps.

737,759

  

Ps.

247,153

 

Ps.

(283,182)

  

Ps.

701,730

19.7          Uncertainties in Open Tax Positions

As of December 31, 2021, and 2020, Grupo Aval recognized tax uncertainty liabilities for Ps. 50,006 and Ps. 111,591 respectively. Uncertain tax positions corresponding to expenses, considered deductible, and which, according to decisions of the tax authorities, could be considered as non-deductible. The balance as of December 31, 2020 is expected to be used fully or released when the inspection rights of the tax authorities with respect to the open tax returns expire.

19.8   Withholdings tax on dividends paid between entities

On December 28, 2018, some changes to tax on distribution of dividends were introduced by means of Law 1943. From there on, there is a new withholding tax (¨WHT") on distributions made to entities, which is treated as a tax credit deducted at source when a subsequent distribution is made by the entity to an individual. In essence, the tax credit resulting from the WHT is awarded to the ultimate beneficiary, no to the entity receiving the dividend in the first place. When the entity first receives the distribution, it accounts for the WHT in equity, as a reduction in dividends payable to individuals in accordance with paragraph 65A of IAS 12.  Grupo Aval recorded WHT by Ps. 11,309 and Ps. 20,331 as of December 31, 2021 and 2020, respectively. The figure is not applicable with respect to payments made by BAC Holding, which is a foreign entity.