HTC 2012 Annual Report Download - page 116

2011 2012
NT$ NT$ US$ (Note 3)
Loss carryforwards $90,371 $138,619 $4,759
Tax credit carryforwards 3,125,027 1,644,674 56,462
Total deferred tax assets 17,394,635 15,051,337 516,713
Less: Valuation allowance (11,132,656) (6,445,409) (221,271)
Total deferred tax assets, net 6,261,979 8,605,928 295,442
Deferred tax liabilities
Unrealized valuation gains on financial instruments (43,668) (2,961) (102)
Unrealized revenue - (14,888) (511)
Unrealized pension cost (30,778) (34,594) (1,187)
Unrealized gain on investment (240,760) (470,743) (16,161)
Unrealized depreciation (25,056) (124,751) (4,283)
Deferred tax liabilities offset against deferred tax assets, net 5,921,717 7,957,991 273,198
Less: Current portion (2,246,196) (3,530,215) (121,193)
Deferred tax assets - non-current $3,675,521 $4,427,776 $152,005
(Concluded)
(3) The income taxes in 2011 and 2012 were as follows:
2011 2012
NT$ NT$ US$ (Note 3)
Current income tax $11,581,019 $4,049,011 $139,003
Less: Increase in deferred income tax assets (2,504,033) (738,171) (25,341)
Effect of tax law changes - (1,298,103) (44,564)
Add (deduct): Underestimation (overestimation) of prior year's income tax 47,653 (151,465) (5,200)
Income tax $9,124,639 $1,861,272 $63,898
(4) Under the Statute for Upgrading Industries, HTC was granted exemption from corporate income tax for as
follows:
The Year of Occurrence Item Exempt from Corporate Income Tax Exemption Period
2006 Sale of wireless phones or smartphones with 3G or GPS function 2006.12.20-2011.12.19
2007 Sale of wireless phones or smartphones with 3G or GPS function 2007.12.20-2012.12.19
2008 Sale of wireless phones or smartphones with 3.5G function 2010.01.01-2014.12.31
2009 Sale of wireless phones or smartphones with 3.5G function 2015.01.01-2018.09.30
(5) Information on the tax credit carryforwards as of December 31, 2012 was as follows:
Laws and Statutes Tax Credit Source Total Creditable Amount Remaining Creditable Amount Expiry Year
NT$ US$ (Note 3) NT$ US$ (Note 3)
Statute for
Upgrading
Industries
Research and development expenditures $2,375,184 $81,540 $1,644,674 $56,462 2013
Under Article 10 of the Statute for Industrial Innovation ("SII") passed by the Legislative Yuan in April 2010, a profit-
seeking enterprise may deduct up to 15% of its research and development expenditures from its income tax payable for
the fiscal year in which these expenditures are incurred, but this deduction should not exceed 30% of the income tax
payable for that fiscal year. This incentive is effective from January 1, 2010 till December 31, 2019.
As of December 31, 2012, the losses carryforwards of Dashwire, Inc., Inquisitive Minds, Inc., HTC America Content
Services, Inc. and Saffron Digital Inc. that had given rise to deferred income tax assets in the United States and could be
carried forward for 20 years were NT$138,619 thousand (US$4,759 thousand).
2012
Income Tax Expense
(Benefit) Income Tax Payable Income Tax Receivable Deferred Tax Assets
(Liabilities)
NT$ US$
(Note 3) NT$ US$
(Note 3) NT$ US$
(Note 3) NT$ US$
(Note 3)
HTC Electronics (Shanghai) Co.,
Ltd. ($851) ($29) $73,919 $2,538 $- $- $136,661 $4,692
HTC Malaysia Sdn. Bhd. 2,947 101 - - 992 34 300 10
HTC Innovation Limited (655) (22) - - - - - -
HTC Poland sp. z o.o. 1,189 41 1 - - - 978 34
HTC Iberia S.L. 1,605 55 1,980 68 - - - -
HTC Germany GmbH. 8,127 279 10,329 355 - - - -
HTC Nordic ApS. 3,139 108 581 20 - - (35) (1)
HTC Luxembourg S.a.r.l. 10,107 347 9,709 333 - - - -
HTC FRANCE CORPORATION 504 17 - - 1,129 39 - -
ABAXIA SAS 6,978 240 13,114 450 - - - -
Saffron Digital Inc. (1,614) (55) - - 761 26 2,471 85
HTC Norway AS 147 5 143 5 - - - -
Dashwire, Inc. 24 1 393 13 - - - -
HTC Communication Sweden AB 273 9 66 2 - - - -
HTC Communication Canada, Ltd. 4,282 147 9,240 317 - - 5,113 176
Inquisitive Minds, Inc. 24 1 - - - - - -
HTC Communication
Technologies (SH) 15,559 534 15,131 519 - - - -
FunStream Corporation - - - - 1 - - -
PT. High Tech Computer
Indonesia 3,372 116 3,227 111 - - - -
HTC South Eastern Europe
Limited liability Company (35) (1) 485 17 - - - -
Yoda Co., Ltd. - - - - 1 - - -
HTC Middle East FZ-LLC - - 1,965 67 - - - -
HTC America Content Services,
Inc. 48 2 23 1 - - - -
$1,861,272 $63,898 $2,713,373 $93,150 $61,533 $2,112 $7,957,991 $273,198
(Concluded)
(2) In August 2012, the Legislative Yuan passed the amendment of Article 8 of the "Income Basic Tax Act"
which increased alternative minimum tax rate from 10% to 12%, eective January 1, 2013. The Company
has revaluated deferred tax assets in accordance with the revised article. Deductible temporary
dierences and tax credit carryforwards that had given rise to deferred tax assets as of December 31, 2011
and 2012 were as follows:
2011 2012
NT$ NT$ US$ (Note 3)
Temporary differences
Unrealized royalties $4,817,745 $5,256,074 $180,441
Unrealized marketing expenses 4,922,310 3,773,168 129,533
Unrealized warranty expense 2,247,065 1,429,433 49,073
Allowance for loss on decline in value of inventory 834,797 950,480 32,630
Unrealized salary and welfare 307,356 413,392 14,192
Unrealized bad-debt expenses 153,749 282,625 9,702
Capitalized expense 69,302 251,698 8,641
Unrealized materials and molding expenses 138,502 147,899 5,077
Unrealized contingent losses on purchase orders 348,990 139,911 4,803
Unrealized sales allowance 71,874 139,088 4,775
Unrealized exchange losses 138,093 42,824 1,470
Other 129,454 441,452 15,155
(Continued)
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