5.1 Taxation
Income taxes refer to taxation of the profits of the different companies in the Group. Value added tax,
property tax, custom duties and similar indirect taxes are not included in the tax expense. Income taxes
are computed based on profit before tax and broken into current taxes and changes in deferred taxes.
Deferred tax assets and liabilities are the result of temporary differences between financial and tax
accounting.
The major components of the income tax expense are:
(NOK THOUSAND) 2019 2018
Current income tax charge:
Tax payable 599 366 485 659
Deferred tax:
Relating to original and reversal of temporary differences -69 945 -44 146
Income tax expense reported in the income statement 529 421 441 513
Reconciliation of Norwegian nominal statutory tax rate to effective tax rate
The difference between the Group’s nominal and effective tax rate is mainly due to non-deductible
expenses, non-refundable withholding taxes on dividends and tax losses carried forward from operations
without recognition of deferred tax assets. In addition, the tax expense is driven by local income tax
from associates where taxes are liable by Jotun A/S as a foreign shareholder. In 2018, the effective tax
rate was negatively affected due to reassessment of the Group’s pricing of internal transactions for the
years 2014 - 2017. The reassessment was required by the Norwegian Tax Authorities. The decision was
appealed and partly accepted by the authorities.
In the following table, reported income tax is reconciled with the calculated tax expense based on the
Norwegian tax rate of 22 per cent (23 per cent in 2018). The main components are specified.
(NOK THOUSAND) 2019 2018
Profit before tax as reported in the income statement 2 078 905 1 115 078
Share of profit of associates and joint ventures net of tax -496 756 -383 747
Profit before tax excluding associates and joint ventures 1 582 149 731 332
Income taxes at Norwegian statutory tax rate 22 % 348 073 23 % 168 206
Non refundable foreign withholding tax 2 % 26 512 5 % 33 819
Corrections previous years -1 % -7 914 7 % 49 955
Tax effect related to equity accounted companies 3 % 44 874 8 % 61 061
Non-deductible expenses and non-taxable income 4 % 56 413 10 % 75 756
Unused tax losses not recognised as deferred tax assets 4 % 67 779 10 % 75 505
Difference between tax rates in Norway and abroad 0 % -6 316 -3 % -22 789
Total income tax expense 529 421 441 513
Effective tax rate excluding profit from associates and joint ventures 33 % 60 %
Effective tax rate based on profit before tax 25 % 40 %
Back to Notes for the Group
Specification of total tax payable
(NOK THOUSAND) 31.12.2019 31.12.2018
Tax payable for the year 599 366 485 659
Prepaid taxes -274 641 -315 386
Withholding taxes receivable -95 717 -87 706
Other tax payable 36 623 67 270
Total tax payable 265 632 149 837
Specification of deferred tax
Deferred tax is generally recognised for all temporary differences. Deferred tax assets for temporary
differences and tax loss carried forward are recognised to the extent that it is probable that future
taxable income will be available to utilise the credits. Deferred tax liabilities comprise the Group’s tax
liabilities that are payable in the future.
(NOK THOUSAND) 31.12.2019 31.12.2018
Non-current assets 303 872 360 440
Current assets -311 820 -215 410
Liabilities -1 313 848 -1 094 480
Tax loss carried forward -71 123 -105 005
Net temporary differences -1 392 919 -1 054 454
Net deferred tax presented in the consolidated statement
of financial position
Deferred tax assets 360 431 287 006
Deferred tax liabilities -37 852 -37 465
Net deferred tax 322 579 249 541
Specification of tax loss carried forward and unused tax credits
(NOK THOUSAND) 31.12.2019 31.12.2018
2019 - 114 554
2020 74 242 85 127
2021 124 522 88 636
2022 61 059 47 735
2023 11 776 472 106
2024 and after 525 994 -
Without expiration 842 025 736 049
Total tax loss carried forward 1 639 617 1 544 207
Calculated nominal tax effect of tax loss carried forward 494 155 453 988
Not recognised deferred tax assets (unused tax credits) -476 943 -434 163
Deferred tax assets recognised from tax loss carried forward 17 212 19 825
Tax loss carried forward relates to subsidiaries with a history of losses that may not be used to offset
taxable income elsewhere in the Group. Jotun’s operations in the US, Brazil, India, Spain, South Africa
and Pakistan have substantial tax reducing temporary differences and tax losses carried forward that
have not been recognised due to uncertainty about future taxable profit available to utilise the credits.
JOTUN GROUP
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