41. Corporate Income Tax

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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