Notes to the financial statements 41. Corporate Income Tax
41. Corporate Income Tax
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The main components of the Company’s tax expense for the year ended December 31st 2009 and for the year ended December 31st 2008 are as follows:
| PLN ‘000 | Year ended Dec 31 2009 | Year ended Dec 31 2008 |
|---|---|---|
| Corporate income tax | 84,239 | 98,150 |
| Deferred tax | 113,557 | (245,274) |
| Tax included in the acquisition price of non-current assets | - | 32,839 |
| Total tax | 197,796 | (114,285) |
| Income tax expense recognised in the statement of comprehensive income | 197,796 | (114,285) |
| Income tax expense recognised in the statement of changes in equity | - | - |
Current portion of the income tax was calculated at the rate of 19% of the tax base.
The difference between the tax amount disclosed in the statement of comprehensive income and the amount calculated by applying the tax rate to pre-tax profit results from the following items:
| PLN ‘000 | Year ended Dec 31 2009 | Year ended Dec 31 2008 |
|---|---|---|
| Pre-tax profit/(loss) of companies subject to 19% tax rate | 1,047,841 | (458,331) |
| Income tax expense at the rate of 19% | 199,090 | (87,083) |
| Tax effect of revenue/income not classified as revenue/income under tax regulations | (117,541) | (44,846) |
| Tax effect of expenses which are non-deductible under tax regulations | 114,941 | 132,368 |
| Tax effect of tax losses deducted in period | (65,751) | (29) |
| Tax effect of tax losses incurred in period | 2,761 | 125,301 |
| Tax effect of interest in investments in associated undertakings | (1,563) | (5,045) |
| Other | (11,145) | (12,190) |
| Total | 120,792 | 108,476 |
| Income tax disclosed in the statement of changes in equity | 88 | - |
| Tax on dividends | - | 202 |
| Adjustments disclosed in current year related to tax for previous years | (29) | (1,113) |
| Income tax expense of companies subject to 19% tax rate | 120,851 | 107,565 |
| Tax effect of foreign operations (1) | (36,612) | (9,415) |
| Total income tax disclosed in the statement of comprehensive income | 84,239 | 98,150 |
| Pre-tax profit/(loss) of foreign operations subject to 28% and 50% tax rate | 61,767 | (45,369) |
| Revenue/income not classified as revenue/income under tax regulations | (16,707) | (14,223) |
| Expenses which are non-deductible under tax regulations | (179,386) | (46,446) |
| Other differences | (3,669) | (3,487) |
| Tax base – taxation at the tax rate of 28% | (137,995) | (109,525) |
| Tax credit in connection with higher depreciation of assets | (44,674) | (20,106) |
| Other | (9,451) | 13,466 |
| Tax base – taxation at the tax rate of 50% | (192,120) | (116,165) |
| Income tax at the rate of 28% | (38,639) | (30,667) |
| Income tax at the rate of 50% | (96,060) | (58,083) |
| Accrued tax loss carry-forward | 96,460 | 79,321 |
| Other differences | 1,627 | 14 |
| Tax effect of foreign operations (1) | (36,612) | (9,415) |
| Corporate income tax receivable | 131,299 | 199,971 |
| Expected tax refund (1) | 131,299 | 199,971 |
| Corporate income tax payable | 11,867 | 8,069 |
| Income tax expected to be paid | 11,867 | 8,069 |
(1) The Parent Undertaking offset corporate income tax in the amount of PLN 177,252 thousand against output VAT payable in 2009 and 2010.
As at December 31st 2009 and December 31st 2008, the net deferred tax assets (liabilities) comprised the following items:
| PLN ‘000 | Dec 31 2009 | Dec 31 2008 |
|---|---|---|
| Deferred tax assets: | ||
| Provision for employee benefits | 18,903 | 19,412 |
| Difference between present tax and accounting value of property, plant and equipment and intangible assets | 28,454 | 23,643 |
| Impairment losses on inventories | 1,531 | 40,108 |
| Impairment losses on property, plant and equipment and intangible assets | 11,036 | 113 |
| Negative valuation of derivatives | 41,875 | 29,339 |
| Accrued tax loss carry-forward | 269,653 | 127,189 |
| Impairment losses on receivables | 20,772 | 16,002 |
| Finance lease | 15,729 | 183 |
| Difference between oil rig decommissioning provision and asset | 10,932 | 8,055 |
| Other | 26,221 | 82,652 |
| Total deferred tax assets | 445,106 | 346,696 |
| Deferred tax liabilities: | ||
| Difference between present tax and accounting value of property, plant and equipment and intangible assets | 351,652 | 189,374 |
| Positive valuation of derivatives | 10,508 | 20,635 |
| Capitalised borrowing costs | 19,009 | 10,794 |
| Finance lease | 16,452 | 180 |
| Other | 32,774 | 3,901 |
| Total deferred tax liabilities | 430,395 | 224,884 |
| Net deferred tax assets/(liabilities) | 14,711 | 121,812 |
As at December 31st 2009, asset related to accrued tax loss carry-forward in the amount of PLN 88 thousand was recognised in the statement of changes in equity.
Since the Group companies are separate taxpayers, deferred tax assets and deferred tax liabilities are calculated at each company individually. Deferred tax assets and deferred tax liabilities are offset by the Group companies. Consequently, consolidated balance-sheets present deferred tax assets and liabilities as follows:
| PLN ‘000 | Dec 31 2009 | Dec 31 2008 |
|---|---|---|
| Deferred tax assets: | 74,267 | 132,223 |
| Deferred tax liabilities: | (59,556) | (10,411) |
| Net deferred tax assets/(liabilities) | 14,711 | 121,812 |
Taxable temporary differences are expected to expire in 2010–2085.
As at December 31st 2009, the value of losses with respect to which no deferred tax assets were recognised in the balance sheet amounted to PLN 43,012 thousand (December 31st 2008: PLN 31,527 thousand).
This is a translation of a document originally issued in Polish
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