28 JOTUN GROUP 6 INCOME TAX Taxes refer to the authorities’ taxation of the profits of the different companies in the Group. Matters like value added tax, social security contribution etc. are not included in “taxes”. Taxes are computed on the basis of accounting profit / loss and broken down into current taxes and change in deferred taxes. Deferred tax is the result of timing differences between financial accounting and tax accounting. The major components of the income tax expense for the years ended 31 December 2016 and 2015 are: CONSOLIDATED INCOME STATEMENT (NOK THOUSAND) 2016 2015 Current income tax charge: Tax payable 524 766 506 268 Deferred tax: Relating to original and reversal of temporary differences –63 248 –4 256 Income tax expense reported in the income statement 461 518 502 011 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (NOK THOUSAND) 2016 2015 Net loss (–) / gain on translation difference on net investment in foreign operations –5 854 –6 637 Net loss (–) / gain om actuarial gains and losses –7 149 –704 Income tax charged directly to other comprehensive income –13 003 –7 341 RECONCILIATION OF NORWEGIAN NOMINAL STATUTORY TAX RATE TO EFFECTIVE TAX RATE The table below reconciles the reported income tax expense to the expected income tax expense according to Norwegian corporate income tax rate of 25%: (NOK THOUSAND) 2016 2016 2015 Profit before tax as reported in the income statement 1 593 739 1 918 055 Share of profit of associated companies and joint ventures (JVs) net of tax –689 598 –562 013 Profit before tax excluding associated companies and JVs 904 142 1 356 043 Expected income taxes at statutory tax rate 25% 226 035 366 132 Effect of credit deduction*) 2% 19 348 23 229 Correction previous years 3% 23 471 12 355 Tax effect on dividends and permanent differences related to equity accounted companies 9% 78 687 71 766 Non-deductible expenses and non-taxable income 5% 42 509 38 656 Tax loss asset not recognised 14% 124 285 84 495 Foreign tax rate differences –6% –52 818 –94 621 Total income tax expense 461 518 502 011 Effective tax rate based on profit before tax 29% 26% Effective tax rate excluding profit from associated companies and JVs 51% 37% Effective tax rate is calculated both as income tax expense relative to profit before tax in the income statement and profit before tax excluding the share of profit after tax in equity accounted companies. Effective tax rate based on profit before tax has increased mainly due to higher tax losses not recognised as deferred tax assets and increased tax on dividend. Effective tax rate calculated based on profit excluding associated companies and joint ventures is affected by local income tax liable by Jotun A/S as a foreign shareholder. *) The amounts include limitations in tax credits for foreign tax paid by Jotun A/S in Norway derived from low-tax jurisdictions and income taxable under the Controlled Foreign Corporation (CFC) rules.
Jotun Annual Report 2016
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