v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

  Note 14. Income Taxes

 

The Company files income tax returns for TG, ES and ES Metals in the Republic of Colombia. GM&P, Componenti USA LLC and ESW LLC are U.S. entities based in Florida subject to U.S. federal and state income taxes. VS files income tax returns in the Republic of Panama. Tecnoglass Inc. does not currently have any tax obligations.

 

On September 14, 2021, the Colombian Government enacted Law 2155 (the Social Investment Act), which increases the corporate income tax to 35% for fiscal year 2022 and thereafter, from the current rate of 31% for 2021 that would have decreased to 30% for 2022 under the prior tax regulation. On December 13, 2022, a tax reform was enacted by means of Law 2277, which maintained corporate income tax rate at 35%, and increased income taxes to Free Trade Zones with single enterprise users and non-exporters, from 20% to 35%.

 

The components of income tax expense are as follows:

 

Schedule of Components of Income Tax Expense (Benefit)

   2022   2021   2020 
   Twelve months ended December 31, 
   2022   2021   2020 
Current income tax               
United States   (7,012)  $(1,679)  $(1,385)
Colombia   (62,230)   (22,354)   (5,035)
Panama   (32)   (52)   (32)
Total current income tax   (69,274)   (24,085)   (6,452)
Deferred income Tax               
United States   422    (1,829)   20 
Colombia   (5,906)   (2,571)   (6,601)
Total deferred income tax   (5,484)   (4,400)   (6,581)
Total income tax provision   (74,758)  $(28,485)  $(13,033)
                
Effective tax rate   32.3%   29.4%   35.3%

 

A reconciliation of the statutory tax rate in Colombia to the Company’s effective tax rate is as follows:

 

Schedule of Effective Income Tax Rate Reconciliation 

   Year ended December 31, 
   2022   2021   2020 
Income tax expense at statutory rates   33.8%   29.6%   30.5%
Non-deductible expenses   0.7%   2.4%   5.9%
Non-taxable income   (2.2)%   (2.6)%   (1.1)%
Effective tax rate   32.3%   29.4%   35.3%

 

No single individual item contributed significantly to the reconciliation of the Company’s effective tax rate to the statutory rate during the year ended December 31, 2020, 2021, and 2022.

 

 

The Company has the following deferred tax assets and liabilities:

 

Schedule of Deferred Tax Assets and Liabilities

   2022   2021 
   Year ended December 31, 
   2022   2021 
Deferred tax assets:          
Property, plant and equipment adjustments   218    471 
Tax benefit on installation of renewable energy project   133    201 
Foreign currency transactions   4,982    3,828 
Other   (1,416)   59 
Total deferred tax assets  $3,917   $4,559 
           
Deferred tax liabilities:          
Depreciation and Amortization   (5,138)   (4,772)
Other   200    (71)
Foreign currency transactions   (3,609)   (2,537)
Total deferred tax liabilities  $(8,547)  $(7,380)
           
Net deferred tax  $(4,632)  $(2,821)

 

Net deferred tax is presented on the balance sheet as follows:

 

Schedule of Net Deferred Tax Liability

   2022   2021 
   Year ended December 31, 
   2022   2021 
Long term deferred income tax asset  $558   $596 
Less: long term deferred income tax liability  $5,190   $3,417