Annual Report 2013 | Suomeksi |

14 Income tax expense

Download as Excel
14.1 Profit before tax
EUR million 2013 2012
Finnish companies 440 495
Swedish companies 476 625
Other companies 583 466
Total 1,499 1,586
14.2 Major components of income tax expense by major countries
EUR million 2013 2012
Current taxes
Finnish companies -104 -97
Swedish companies -93 -91
Other companies -46 -13
Total -243 -201
Deferred taxes
Finnish companies 81 -13
Swedish companies -7 172
Other companies -56 -30
Total 18 129
Adjustments recognised for current tax of prior periods
Finnish companies -1 0
Swedish companies 5 -2
Other companies 1 0
Total 5 -2
Total income taxes -220 -74
14.3 Income tax rate
The table below explains the difference between the theoretical enacted tax rate in Finland compared to the tax rate in the income statement.
EUR million 2013 % 2012 %
Profit before tax 1,499 1,586
Tax calculated at nominal Finnish tax rate -367 24.5 -389 24.5
Tax rate changes 80 -5.3 230 -14.5
Differences in tax rates and regulations 55 -3.7 42 -2.6
Income not subject to tax 2 -0.2 16 -1.0
Tax exempt capital gains 12 -0.8 32 -2.0
Expenses not deductible for tax purposes -7 0.5 -7 0.4
Share of profit of associated companies and joint ventures 25 -1.7 4 -0.3
Taxes related to dividend distributions 0 0.0 -4 0.3
Tax losses for which no deferred tax was recognised -22 1.5 -6 0.4
Utilisation of previously unrecognised tax losses 3 -0.2 9 -0.6
Other items -5 0.3 0 0.0
Adjustments recognised for taxes of prior periods 4 -0.2 -1 0.1
Tax charge in the income statement -220 14.7 -74 4.7
Key tax indicators:
- The weighted average applicable tax rate for 2013 is 22.5% (2012: 25.6%)
- The effective tax rate in the income statement for 2013 is 14.7% (2012: 4.7%)
- The effective tax rate excluding the share of profits from associates, tax exempt capital gains and tax rate changes for 2013 is 22.3% (2012: 21.2%)
- The total tax rate for 2013 is 33.8% (2012 29.0%).
Fortum has a material deferred tax liability owing to its investments in non current assets. These assets are depreciated more rapidly for tax than for accounting purposes resulting in lower current tax payments at the start of an assets’ lifetime and higher tax payments at the end of its lifetime. This difference results in a deferred tax liability, which is valued using the tax rate expected to be in force when the liability unwinds.
In December 2013 the Finnish Parliament passed legislation lowering the income tax rate from 24.5% to 20%. The one-time positive effect in the income tax cost from the tax rate change was approximately EUR 79 million. Respectively, in 2012 tax rate was positively effected with EUR 230 million from lowering of Swedish tax rate from 26.3% to 22%. These tax rate changes have created the effective tax rate to fluctuate.
One time tax exempt capital gains reduced the effective tax rate in 2013 through mainly the sale of small hydro plants in Sweden, Swedish energy company Härjeåns Kraft AB and Infratek ASA in Norway. Similar reductions in effective tax rate occurred in 2012 through divestments of some heat operations in Finland and Estonia. Capital gains are booked in Finnish, Swedish, Norwegian and Dutch companies.
14.4 Total taxes
Fortum has current income taxes in 2013 totalling EUR 243 million (2012: 201). The effective tax rate indicates tax burden taking into account the differences between accounting and tax rules, including tax exempt capital gains, tax rate changes and other differences. The effective tax rate may therefore fluctuate.
Taxes borne indicate different taxes that Fortum pays for the period. In 2013 Fortum’s taxes borne were EUR 644 million (2012: 565). Taxes borne include corporate income taxes, production taxes, employment taxes, taxes on property and cost of indirect taxes. Production taxes include also production taxes and taxes on property paid through electricity purchased from associated companies. The total tax rate (TTR) indicates the burden on taxes borne by Fortum from its profit before these taxes. On the contrary to the effective tax rate the total tax rate is steadily increasing as different production taxes and real estate taxes are increasing.
In addition, Fortum administers and collects different taxes on behalf of governments and authorities. Such taxes include VAT, and excise taxes on power consumed by customers, payroll taxes and withholding taxes. The amount of taxes collected by Fortum was EUR 834 million (2012: 749). In 2012 Fortum reported VAT as gross amount for input and output VAT. The gross amount of taxes collected was EUR 3,918 million in 2012.
Fortum has had several tax audits ongoing during 2013. Fortum has received income tax assessments in Sweden for the years 2009-2011, in Belgium for the years 2008 and 2009 as well as in Finland regarding the year 2007. Fortum has appealed all assessments received. Based on legal analysis, no provision has been accounted for in the financial statements related to tax audits.
See also Note 29 Deferred income taxes,
Note 11 Materials and services and
Operating and financial review; Sustainability.
For further information regarding the on-going tax appeals see Note 39 Legal actions and official proceedings.
X

Search Fortum Annual Report 2013

Start typing...

Search results