Shareofnetincomefromassociatedcompanies share of net

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Unformatted text preview: . Effective tax rate The table below reconciles the reported income tax expense to the expected income tax expense according to the Norwegian corporate income tax rate of 28%. It also presents the main elements of the tax expense. Selected line items are commented below the table. NOK in millions income tax expense at corporate income tax rate in Norway (28%) Tax rates outside Norway different from 28% share of net income from associated companies Non-deductible expenses impairment of goodwill that is not tax deductible Gains/losses on sale/exchange of shares Current and deferred taxes on retained earnings in subsidiaries and associated companies deferred tax assets not recognised current year Change in previously not recognised deferred tax assets Tax credits significant disputed items Tax effect of discontinued operations Other Income tax expense Effective tax rate in % 2011 (3 521) 261 592 (540) (430) 497 (613) (2 393) 151 167 - - 471 (5 358) 42.6 2010 (5 657) 508 881 (301) (4) 1 569 483 (1 945) 56 39 (815) 91 112 (4 982) 24.7 Tax rates outside Norway different from 28% Significant effects are related to the fact that Telenor Serbia (10%) and Telenor Montenegro (9%) have tax rates lower than 28%, while Grameenphone Ltd. (Bangladesh: 35%), Telenor Pakistan (35%) and uninor (India: 30.9%) have higher tax rates. The effect of changes in tax rate in Thailand from 30% in 2011 to 23% in 2012 and 20% in 2013 is also reflected. share of net income from associated companies Share of net income from associated companies is recognised on an after tax basis and therefore does not impact the Group’s tax expense, see note 21. impairment of goodwill that is not tax deductible In 2011, goodwill impairment is primarily related to uninor, see note 17 and 18. /page 41/ telenor annual report 2011 notes to the financial statements / telenor group Gains/losses on sale/exchange of shares Gain on disposal and deemed disposal of associated companies is included in this line. In 2011, this mainly relates to the NOK 1.6 billion accounting gain in conjunction with the combination of VimpelCom and Wind Telecom, which is not taxable. For 2010 this mainly relates to the NOK 6.5 billion gain from the combination of OJSC VimpelCom and Kyivstar to VimpelCom Ltd, which resulted in a taxable gain of 3% of NOK 34 billion taxed at 28% or NOK 282 million in current tax expense in 2010. See note 21 for further information regarding these transactions. Current and deferred taxes on retained earnings in subsidiaries and associated companies This line includes current taxes on dividends received, as well as deferred tax liability (primarily withholding tax) the Group has recognised on undistributed earnings in subsidiaries and associated companies outside of Norway. The net tax income in 2010 was due to reversal of withholding tax provisions related to OJSC VimpelCom and Kyivstar of approximately NOK 1 billion. undistributed retained earnings in foreign subsidiaries and associates for which deferred taxes have not been provided amount to NOK 1.6 billion. deferred tax assets not recognised current year For 2011 and 2010 this primarily relates to tax losses in uninor. significant disputed items In 2010, Telenor ASA received a reassessment by the Norwegian tax authorities of its 2006 and 2007 tax returns, concerning the gain on a Total Return Swap agreement related to shares in OJSC VimpelCom as the underlying object. The Norwegian tax authorities claim that the Total Return Swap should be taxed as financial instruments with recurring realisations. A provision of NOK 815 million for tax expenses was recognised and paid in 2010. The Group disagrees with the tax authorities’ position and has appealed the reassessment. Other The positive effect in 2011 is mainly due to the reversal of the CFC taxation, following the signing of the continuation of the tax agreement between Norway and Montenegro, as well as the reversal of over provision of current tax of previous years in Grameenphone and clarification of tax rules concerning the broadband investment tax incentives in DiGi. Tax losses carried forward Tax losses carried forward in selected countries expire as follows as of 31 december 2011: NOK in millions 2012 2013 2014 2015 2016 2017 and later Not time-limited Total tax losses carried forward On which deferred tax assets have not been recognised Tax losses on which deferred tax assets have been recognised Norway sweden india Pakistan Other Total - - - - - - 1 424 1 424 1 372 52 - - - - - - 287 287 - 287 - - - - - 8 346 1 846 10 192 10 176 16 - 5 17 9 - 8 6 190 6 229 3 399 2 830 20 43 176 80 91 120 150 680 505 175 20 47 192 89 92 8 474 9 897 18 812 15 452 3 360 Tax losses carried forward in selected countries expire as follows as of 31 december 2010: NOK in millions 2011 2012 2013 2014 2015 2016 and later Not time-limited Total tax losses carried forward On which deferred tax assets have not been recognised Tax losses on which deferred tax assets have been recognised Norway sweden india Pakistan Other Total - - - - - - 1 440 1 440 1 437 3 - - - - - - 1 137 1 137 329 807 - - - - - 4 337 1 182 5 519 5 519 - - 5 12 19 9 8 7 081 7 134 3 591 3 543 135 22 48 262 67 208 181 923 923 - 135 27 60 281 76 4 553 11 021 16 152 11 799 4 353 For uninor in India and Telenor Pakistan, deferred tax assets are recognised for the carry forward of unused tax losses only to the extent that these can be utilised against taxable temporary differen...
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