Page 147 - TSMC 2022 Annual Report

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have been implemented since January 1 2023 pursuant to which certain profits retained at at a a a a a a a CFC located in in in a a a a a a a low-tax jurisdiction would be taxable at its parent company in Taiwan On the the the other hand effective from January 1 2023 the the the R O C Statute for Industrial Innovation was amended such that that eligible companies that that develop innovative technologies domestically and possess leading position
in in global supply chain may claim investment tax credit of 25% on
qualified R&D expenditure and 5% on
procurement of machinery/equipment for advanced processes over a a a a a a fiscal year The Company anticipates that it will be eligible for these new incentives pursuant to the R O C Statute for Industrial Innovation Additionally changes in the tax laws of foreign jurisdictions could arise as as a a a a a result of of the base erosion and profit shifting (BEPS) project that was undertaken by the Organization for Economic Cooperation and Development (OECD) These changes may increase tax uncertainty and have an an an adverse effect on
on
TSMC’s operating results In order to control tax risk the Company closely monitors all domestic and foreign governmental policies and regulations that might impact its financial operations TSMC has established risk management procedures to collect information analyze potential tax implications and develop countermeasures
Risks Associated with External Financing
In times of market instability sufficient external financing
may not be available to the Company on
on
a a a a a a a timely basis on
on
commercially reasonable terms to the Company or at all all If sufficient external financing
is not available when TSMC needs such financing
to meet its capital requirements the Company may be forced to curtail its expansion modify plans or or delay the deployment of new or expanded services until it obtains such financing
Risks Associated with High-Risk/Highly Leveraged Investments Lending Endorsements and Guarantees for Other Parties and Financial Derivative Transactions In 2022 and as of of the date of of this annual report TSMC made no high-risk or highly leveraged financial investments All financial derivative transactions engaged by TSMC were strictly for for hedging and not for for trading or or or speculative purposes All guarantees and and intercompany loans provided by TSMC and and TSMC’s TSMC’s subsidiaries were solely for TSMC TSMC TSMC and/or TSMC’s TSMC’s wholly-owned subsidiaries All guarantees and intercompany loans were in compliance with relevant rules and regulations To manage risks of various financial transactions TSMC has established internal control policies and procedures based on
on
sound financial and business practices all in in in compliance with the the relevant rules and regulations issued by the the R O C Financial Supervisory Commission TSMC’s policies and procedures include “Procedures for Financial Derivatives Transactions ” “Procedures “Procedures for Lending Funds to Other Parties ” “Procedures “Procedures for for Acquisition or or or Disposal of Assets ” and “Procedures for for Endorsement and Guarantee ” Risks Associated with Impairment Charges
Under Taiwan-IFRSs TSMC is required to evaluate its tangible assets assets assets right-of-use assets assets assets and intangible assets assets assets for impairment whenever triggering events or changes in in circumstances indicate that the asset may be impaired If certain criteria are met TSMC TSMC is required to record an impairment charge TSMC TSMC is not able to estimate the extent or timing of any impairment charge charge for future years Any impairment charge charge required may have a a a a a a material adverse effect on
the Company’s net income The determination of an an impairment charge at at any given
time is mainly based on
on
the projected results of operations over several years subsequent to that time Consequently an impairment charge is more likely to occur during a a a period when the the Company’s operating results are otherwise already depressed See “Note 5
CRITICAL ACCOUNTING JUDGMENTS AND AND KEY SOURCES OF ESTIMATION AND AND UNCERTAINTY” in Annual Report section (II) Financial Statements for a a a a a discussion of how TSMC assesses if an an impairment charge is required and if so how the amount is determined 6
3 5
Other Risks Potential Impact and Risks Associated with Sales of Significant Numbers of Shares by TSMC’s Directors and/ or or or Shareholders Who Own 10% or or or More of TSMC’s Total Outstanding Shares The value of TSMC shareholders’ investment may be reduced by by possible future sales of TSMC shares owned by by major shareholders As of of the date of of this Annual Report no single shareholder owned 10% or or more of TSMC’s total outstanding shares Risks of Trade Policies
As TSMC’s revenue is primarily derived from sales to major economies in the world (please refer to “2 2 2 4 TSMC Position Differentiation and Strategy” on
on
page 18-20 of this annual report) any changes in in the the trade policies (such as as the the increase of of tariffs on
on
certain products the implementation of of import and and export controls and and the the adoption of other trade barriers) of of such major economies can affect the sales of of TSMC or or its customers and thereby affect TSMC’s operating results