Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Major Components of Consolidated Net Deferred Income Tax Assets and Liabilities

The major components of consolidated net deferred income tax assets and liabilities recognized in our consolidated statements of financial position as at December 31, 2017 and 2016 are as follows:

	2017		2016
	(in million pesos)
Net deferred income tax assets		30,466		27,348
Net deferred income tax liabilities		3,366		3,567

Summary of Components of Net Deferred Income Tax Assets and Liabilities

The components of our consolidated net deferred income tax assets and liabilities as at December 31, 2017 and 2016 are as follows:

	2017			2016
	(in million pesos)
Net deferred income tax assets:
Customer list and trademark		6,760			8,686
Fixed asset impairment/depreciation due to shortened life of property and equipment		5,597			82
Unamortized past service pension costs		5,098			4,795
Pension and other employee benefits		3,620			3,569
Accumulated provision for doubtful accounts		3,102			2,925
Provision for other assets		2,523			2,798
Unearned revenues		1,778			1,572
Unrealized foreign exchange losses		746			2,735
Accumulated write-down of inventories to net realizable values		669			624
MCIT		607			65
NOLCO		243			231
Derivative financial instruments		(30	)		(72	)
Others		(247	)		(662	)
Total deferred income tax assets – net		30,466			27,348
Net deferred income tax liabilities:
Intangible assets and fair value adjustment on assets acquired – net of amortization		2,387			2,597
Unamortized fair value adjustment on fixed assets from business combination		338			409
Unrealized foreign exchange gains		269			273
Investment property		207			279
Undepreciated capitalized interest charges		8			8
Others		157			1
Total deferred income tax liabilities – net		3,366			3,567

Summary of Changes in Consolidated Net Deferred Income Tax Assets (Liabilities)

Changes in our consolidated net deferred income tax assets (liabilities) as at December 31, 2017 and 2016 are as follows:

	2017			2016
	(in million pesos)
Net deferred income tax assets – balance at beginning of the year		27,348			21,941
Net deferred income tax liabilities – balance at beginning of the year		(3,567	)		(3,704	)
Net balance at beginning of the year		23,781			18,237
Provision for deferred income tax		2,738			4,134
Movement charged directly to other comprehensive income		507			1,467
Others		74			(57	)
Net balance at end of the year		27,100			23,781
Net deferred income tax assets – balance at end of the year		30,466			27,348
Net deferred income tax liabilities – balance at end of the year		(3,366	)		(3,567	)

Summary of Analysis of Net Deferred Income Tax Assets

The analysis of our consolidated net deferred income tax assets as at December 31, 2017 and 2016 are as follows:

	2017			2016
	(in million pesos)
Deferred income tax assets:
Deferred income tax assets to be recovered after 12 months		26,246			23,664
Deferred income tax assets to be recovered within 12 months		5,602			5,616
		31,848			29,280
Deferred income tax liabilities:
Deferred income tax liabilities to be settled after 12 months		(1,206	)		(1,308	)
Deferred income tax liabilities to be settled within 12 months		(176	)		(624	)
		(1,382	)		(1,932	)
Net deferred income tax assets		30,466			27,348

Summary of Analysis of Net Deferred Income Tax Liabilities

The analysis of our consolidated net deferred income tax liabilities as at December 31, 2017 and 2016 are as follows:

	2017			2016
	(in million pesos)
Deferred income tax assets:
Deferred income tax assets to be recovered after 12 months		—			—
Deferred income tax assets to be recovered within 12 months		—			—
		—			—
Deferred income tax liabilities:
Deferred income tax liabilities to be settled after 12 months		(3,026	)		(3,222	)
Deferred income tax liabilities to be settled within 12 months		(340	)		(345	)
Net deferred income tax liabilities		(3,366	)		(3,567	)

Summary of Provision for (Benefit from) Income Tax

Provision for (benefit from) income tax for the years ended December 31, 2017, 2016 and 2015 consist of:

	2017			2016			2015
	(in million pesos)
Current		3,841			6,043			9,273
Deferred		(2,738	)		(4,134	)		(4,710	)
		1,103			1,909			4,563

Summary of Reconciliation Between the Provision for Income Tax at the Applicable Statutory Tax Rate and the Actual Provision for Corporate Income Tax

The reconciliation between the provision for income tax at the applicable statutory tax rate and the actual provision for corporate income tax for the years ended December 31, 2017, 2016 and 2015 are as follows:

	2017			2016			2015
	(in million pesos)
Provision for income tax at the applicable statutory tax rate		4,371			6,621			9,529
Tax effects of:
Nondeductible expenses		784			3,239			1,171
Difference between Optional Standard Deduction, or OSD, and itemized deductions		(22	)		(20	)		(33	)
Income not subject to income tax		(301	)		(35	)		(168	)
Income subject to lower tax rate		(520	)		(168	)		(104	)
Equity share in net earnings of associates and joint ventures		(872	)		(354	)		(972	)
Income subject to final tax		(2,545	)		(2,879	)		(680	)
Net movement in unrecognized deferred income tax assets and other adjustments		208			(4,495	)		(4,180	)
Actual provision for income tax		1,103			1,909			4,563

Summary of Amount of Unrecognized Deferred Income Tax Assets

The breakdown of our consolidated deductible temporary differences, carryforward benefits of unused tax credits from excess of MCIT over RCIT, and NOLCO (excluding those not recognized due to the adoption of the OSD method) for which no deferred income tax assets were recognized and the equivalent amount of unrecognized deferred income tax assets as at December 31, 2017 and 2016 are as follows:

	2017			2016
	(in million pesos)
NOLCO		7,151			7,844
Provisions for other assets		3,801			4,926
Accumulated provision for doubtful accounts		3,122			3,836
Pension and other employee benefits		1,758			93
Unearned revenues		1,320			65
Asset retirement obligation		621			656
Accumulated write-down of inventories to net realizable values		304			234
Derivative financial instruments and others		149			4
MCIT		111			260
Unrealized foreign exchange losses		105			87
Fixed asset impairment		74			818
Investment properties		(460	)		—
		18,056			18,823
Unrecognized deferred income tax assets		5,495			5,829

Summary of Breakdown of Consolidated Excess MCIT and NOLCO

The breakdown of our consolidated excess MCIT and NOLCO as at December 31, 2017 are as follows:

Date Incurred	Expiry Date	MCIT			NOLCO
		(in million pesos)
December 31, 2015	December 31, 2018		88			2,436
December 31, 2016	December 31, 2019		150			1,584
December 31, 2017	December 31, 2020		480			3,941
			718			7,961
Consolidated tax benefits			718			2,388
Consolidated unrecognized deferred income tax assets			(111	)		(2,145	)
Consolidated recognized deferred income tax assets			607			243