Annual Report 2013 | Suomeksi |

29 Deferred income taxes

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Accounting policies + -
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the closing date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets are set off against deferred tax liabilities if they relate to income taxes levied by the same taxation authority.
Deferred tax is provided on temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group, and it is probable that the temporary difference will not reverse in the foreseeable future.
Critical accounting estimates: Assumptions and estimates regarding future tax consequences + -
Fortum has deferred tax assets and liabilities which are expected to be realised through the income statement over the extended periods of time in the future. In calculating the deferred tax items, Fortum is required to make certain assumptions and estimates regarding the future tax consequences attributable to differences between the carrying amounts of assets and liabilities as recorded in the financial statements and their tax basis.
Assumptions made include the expectation that future operating performance for subsidiaries will be consistent with historical levels of operating results, recoverability periods for tax loss carry-forwards will not change, and that existing tax laws and rates will remain unchanged into foreseeable future. Fortum believes that it has prudent assumptions in developing its deferred tax balances.
The Group recognises liabilities for anticipated tax dispute issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
If the actual final outcome (regarding tax disputes) would differ negatively from management's estimates with 10%, the Group would need to increase the income tax liability by EUR 36 million.
The movement in deferred tax assets and liabilities during 2013
EUR million 1 Jan
2013
Charged
to
income
state-
ment
Charged
to other
compre-
hensive
income
Exchange
rate
differ-
ences
reclassi-
fications and
other
changes
Acqui-
sitions,
disposals
and
assets
held
for sale
31 Dec
2013
Deferred tax assets
Property, plant and equipment 17 2 - - - 19
Provisions 42 -18 - - - 24
Tax losses and tax credits carry-forward 80 - - - - 80
Pension obligations 29 2 -19 - - 12
Other 43 -14 - -2 - 27
Total deferred tax assets 211 -28 -19 -2 0 162
Offset against deferred tax liabilities -34 2 -32
Net deferred tax assets 177 -26 -19 -2 0 130
Deferred tax liabilities
Property, plant and equipment 1,840 -53 - -55 -141 1,591
Derivative financial instruments 29 9 9 - - 47
Other 44 -2 - - - 42
Total deferred tax liabilities 1,913 -46 9 -55 -141 1,680
Offset against deferred tax assets -34 2 - - - -32
Net deferred tax liabilities 1,879 -44 9 -55 -141 1,648
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
Deferred income tax liabilities of EUR 7 million (2012: 8) have been recognised for the withholding tax and other taxes that would be payable on the all unremitted earnings of Estonian subsidiaries. Unremitted earnings from these companies totalled EUR 32 million on 31 December 2013 (2012: 26).
Deferred tax assets and liabilities from acquisitions, disposals and assets held for sale in 2013 relate to the sale of Fortum Sähkönsiirto Oy and Fortum Espoo Distribution Oy shares in 2014.
See Note 9 Assets held for sale.
The movement in deferred tax assets and liabilities during 2012
EUR million 1 Jan
2012
Charged
to
income
state-
ment
Charged
to other
compre-
hensive
income
Exchange
rate
differ-
ences
reclassi-
fications and
other
changes
Acqui-
sitions,
disposals
and
assets
held
for sale
31 Dec
2012
Deferred tax assets
Property, plant and equipment 21 -4 - - - 17
Provisions 43 -1 - - - 42
Tax losses and tax credits carry-forward 84 -4 - - - 80
Pension obligations 25 0 4 - - 29
Other 42 1 - - - 43
Total deferred tax assets 215 -8 4 - 0 211
Offset against deferred tax liabilities -40 6 - - - -34
Net deferred tax assets 175 -2 4 0 0 177
Deferred tax liabilities
Property, plant and equipment 1,967 -179 - 58 -6 1,840
Derivative financial instruments 66 2 -39 - - 29
Other 4 40 - - - 44
Total deferred tax liabilities 2,037 -137 -39 58 -6 1,913
Offset against deferred tax assets -40 6 - - - -34
Net deferred tax liabilities 1,997 -131 -39 58 -6 1,879
Deferred income tax assets are recognised for tax loss carry-forward to the extent that realisation of the related tax benefit through future profits is probable. The recognised tax assets relate to losses carry-forward with no expiration date and partly with expiry date as described below.
Deferred income tax assets recognised for tax loss carry-forwards
2013 2012
EUR million Tax
losses
Deferred
tax
asset
Tax
losses
Deferred
tax
asset
Losses without expiration date 6 2 10 3
Losses with expiration date 320 78 262 78
Total 327 80 272 81
Deferred tax assets of EUR 47 million (2012: 31) have not been recognised in the consolidated financial statements, because the realisation is not probable. The major part of the unrecognised tax asset relates to loss carry-forwards that are unlikely to be used in the foreseeable future.
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