Income Tax (Tables)

Income tax expense consisted of the following:

Years Ended December 31

Current income tax expense

Current tax expense recognized in the current year

Income tax adjustments on prior years

Other income tax adjustments

Deferred income tax expense (benefit)

The origination and reversal of temporary differences

Investment tax credits

Income tax expense recognized in profit or loss

A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

Years Ended December 31

Income tax expense at the statutory rate

Tax effect of adjusting items:

Nondeductible (deductible) items in determining taxable income

Additional income tax under the Alternative Minimum Tax Act

Additional income tax on unappropriated earnings

The origination and reversal of temporary differences

Income tax adjustments on prior years

Other income tax adjustments

Income tax expense recognized in profit or loss

The income tax adjustments on prior years were primarily due to the difference between the actual and estimated income tax on unappropriated earnings.

The analysis of deferred income tax assets and liabilities was as follows:

Deferred income tax assets

Temporary differences

Unrealized exchange losses

Unrealized loss on inventories

Net defined benefit liability

Deferred compensation cost

Investment tax credits

Deferred income tax liabilities

Temporary differences

Year Ended December 31, 2021

Balance,
Beginning of

Other
Comprehensive
Income

Effect of
Exchange Rate
Changes

Deferred income tax assets

Temporary differences

Investment tax credits

Net defined benefit liability

Unrealized loss on inventories

Deferred compensation cost

Deferred income tax liabilities

Temporary differences

Unrealized exchange gains

Year Ended December 31, 2022

Balance,
Beginning of

Other
Comprehensive
Income

Effect of
Exchange Rate
Changes

Deferred income tax assets

Temporary differences

Unrealized exchange losses

Unrealized loss on inventories

Net defined benefit liability

Investment tax credits

Deferred compensation cost

Deferred income tax liabilities

Temporary differences

Unrealized exchange gains

Year Ended December 31, 2023

Other
Comprehensive
Income

Exchange Rate
Changes

Deferred income tax assets

Temporary differences

Unrealized exchange losses

Unrealized loss on inventories

Net defined benefit liability

Deferred compensation cost

Investment tax credits

Deferred income tax liabilities

Temporary differences

As of December 31, 2022, the profits generated from the following project of TSMC are exempt from income tax for a five-year period:

Tax-exemption Period

Construction and expansion of 2009 by TSMC