Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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, 2020 and 2019 are as follows:

	2020		2019
	(in million pesos)
Net deferred income tax assets		19,556		23,623
Net deferred income tax liabilities		726		2,583

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, 2020 and 2019 are as follows:

	2020			2019
	(in million pesos)
Net deferred income tax assets:
Pension and other employee benefits		6,394			4,886
Unamortized past service pension costs		4,874			5,846
Accumulated provision for doubful accounts		3,577			3,806
Provisions		2,917			1,661
Unearned revenues		2,509			2,108
Customer list and trademark		1,116			3,890
Accumulated write-down of inventories to net realizable values		699			701
Lease liability over right-of-use assets under IFRS 16		666			393
NOLCO		88			432
Fixed asset impairment/depreciation due to shortened life of property and equipment		61			138
Derivative financial instruments		33			—
Excess MCIT over RCIT		3			1,408
Taxes and duties capitalized		(124	)		—
Unrealized foreign exchange losses (gains)		(457	)		580
Others		(2,800	)		(2,226	)
Total deferred income tax assets – net		19,556			23,623
Net deferred income tax liabilities:
Investment property		569			278
Unrealized foreign exchange gains		167			254
Intangible assets and fair value adjustment on assets acquired – net of amortization		70			1,964
Others		(80	)		87
Total deferred income tax liabilities		726			2,583

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, 2020 and 2019 are as follows:

	2020			2019
	(in million pesos)
Net deferred income tax assets – balances at beginning of the year		23,623			27,697
Net deferred income tax liabilities – balances at beginning of the year		(2,583	)		(2,981	)
Net balances at beginning of the year		21,040			24,716
Movement charged directly to other comprehensive income		1,811			2,673
Provision for deferred income tax		(3,989	)		(6,267	)
Adjustments due to adoption of IFRS 16		—			(83	)
Others		(32	)		1
Net balances at end of the period		18,830			21,040
Net deferred income tax assets – balances at end of the year		19,556			23,623
Net deferred income tax liabilities – balances at end of the year		(726	)		(2,583	)

Summary of Analysis of Net Deferred Income Tax Assets

The analysis of our consolidated net deferred income tax assets as at December 31, 2020 and 2019 are as follows:

	2020		2019
	(in million pesos)
Deferred income tax assets:
Deferred income tax assets to be recovered after 12 months		13,041		16,033
Deferred income tax assets to be recovered within 12 months		6,515		7,590
		19,556		23,623

Summary of Analysis of Net Deferred Income Tax Liabilities

The analysis of our consolidated net deferred income tax liabilities as at December 31, 2020 and 2019 are as follows:

	2020			2019
	(in million pesos)
Deferred income tax liabilities:
Deferred income tax liabilities to be settled after 12 months		(477	)		(2,376	)
Deferred income tax liabilities to be settled within 12 months		(249	)		(207	)
Net deferred income tax liabilities		(726	)		(2,583	)

Summary of Provision for Income Tax

Provision for income tax for the years ended December 31, 2020, 2019 and 2018 consist of:

	2020		2019		2018
	(in million pesos)
Current		4,452		3,283		2,467
Deferred (Note 3)		3,989		6,267		1,375
		8,441		9,550		3,842

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, 2020, 2019 and 2018 are as follows:

	2020			2019			2018
	(in million pesos)
Provision for income tax at the applicable statutory tax rate		9,906			9,701			6,845
Tax effects of:
Nondeductible expenses		144			907			1,235
Equity share in net losses (income) of associates and joint ventures		(20	)		(220	)		26
Loss (income) not subject to income tax		(27	)		154			(1,827	)
Income subject to final tax		(189	)		(599	)		(297	)
Difference between Optical Standard Deduction, OSD, and itemized deductions		(426	)		(251	)		(22	)
Special deductible items and income subject to lower tax rate		(537	)		(643	)		(750	)
Net movement in unrecognized deferred income tax assets and other adjustments		(410	)		501			(1,368	)
Actual provision for income tax		8,441			9,550			3,842

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, 2020 and 2019 are as follows:

	2020			2019
	(in million pesos)
Accumulated provision for expected credit losses		2,907			2,947
NOLCO		1,358			3,322
Fixed asset impairment		1,284			1,146
Provisions		761			116
Pension and other employee benefits		61			—
Excess MCIT over RCIT		20			27
Unearned revenues		17			95
Operating lease		10			1
Unrealized foreign exchange losses		5			45
Accumulated write-down of inventories to net realizable values		2			11
Interest on subordinated shareholder advances		(4	)		—
Gain on disposal of asset		—			105
		6,421			7,815
Unrecognized deferred income tax assets		1,940			2,294

Summary of Breakdown of Consolidated Excess MCIT and NOLCO

The breakdown of our consolidated excess MCIT and NOLCO as at December 31, 2020 are as follows:

Date Incurred	Expiry Date	MCIT			NOLCO
		(in million pesos)
December 31, 2018	December 31, 2021		—			1,224
December 31, 2019	December 31, 2022		9			63
December 31, 2020	December 31, 2025		14			188
			23			1,475
NOLCO incurred by foreign affiliates which can be carried over indefinitely			—			195
			23			1,670
Consolidated tax benefits			23			501
Consolidated unrecognized deferred income tax assets			(20	)		(413	)
Consolidated recognized deferred income tax assets			3			88