Income taxes
In CHF million |
2013 |
2012 restated |
||
---|---|---|---|---|
Current income tax expense | 322 | 318 | ||
Adjustments recognised for current tax of prior periods | (20) | 19 | ||
Deferred tax expense | 32 | 81 | ||
Total income tax expense recognised in income statement | 334 | 418 | ||
Thereof Switzerland | 354 | 431 | ||
Thereof foreign countries | (20) | (13) |
In addition, other comprehensive income reflects income taxes of CHF 184 million (prior year: gain of CHF 157 million) which may be analysed as follows:
In CHF million |
2013 |
2012 restated |
||
---|---|---|---|---|
Foreign currency translation adjustments of foreign subsidiaries | (14) | 6 | ||
Actuarial gains and losses from defined benefit pension plans | (169) | 151 | ||
Change in fair value of cash flow hedges | – | 1 | ||
Gains and losses from cash flow hedges transferred to income statement | (1) | (1) | ||
Total income tax expense recognised in other comprehensive income | (184) | 157 | ||
Thereof Switzerland | (184) | 157 | ||
Thereof foreign countries | – | – |
In prior years, valuation allowances on investments were recognised in the separate financial statements of Group subsidiaries and were deducted for tax purposes. The 2013 impairment tests led to valuation results in excess of the net carrying amount of investments. In order for these results to be reflected in taxable profits, these recoveries in value must be sustainable. This is not the case shortly after recognition of an impairment loss as a longer period is required in order that a recovery in value can be corroborated. For this reason, no tax effects were recognised on the difference between the valuation results and the net carrying amount of the investments in the separate financial statements for 2013. Should the recoveries in value be classified as sustainable at some point in the future, this could result in a cash outflow of up to CHF 260 million.
Analysis of income taxes
The applicable income tax rate for the purposes of the following analysis of income tax expense is the weighted average income tax rate calculated on the basis of the operating companies of the Group in Switzerland. The applicable income tax rate amounts to an unchanged 20.6%.
In CHF million |
2013 |
2012 restated |
||
---|---|---|---|---|
Income before income taxes in Switzerland | 2,149 | 2,364 | ||
Income before income taxes foreign countries | (120) | (131) | ||
lncome before income taxes | 2,029 | 2,233 | ||
Applicable income tax rate | 20.6% | 20.6% | ||
Income tax expense at the applicable income tax rate | 418 | 460 | ||
Reconciliation to reported income tax expense | ||||
Effect of share of results of associates | (6) | (7) | ||
Effect of tax rate changes on deferred taxes | (2) | 1 | ||
Effect of use of different income tax rates in Switzerland | (7) | (7) | ||
Effect of use of different income tax rates in foreign countries | (12) | (16) | ||
Effect of non-recognition of tax loss carry-forwards | 9 | 17 | ||
Effect of recognition and offset of tax loss carry-forwards not recognised in prior years | (47) | (21) | ||
Effect of deferred tax assets written off | 4 | – | ||
Effect of impairment losses on goodwill | 5 | – | ||
Effect of exclusively tax-deductible expenses and income | (20) | (27) | ||
Effect of non-taxable income and non-deductible expenses | 8 | (1) | ||
Effect of income tax of prior periods | (16) | 19 | ||
Total income tax expense | 334 | 418 | ||
Effective income tax rate | 16.5% | 18.7% |
In 2012 and 2013, previously unrecognised tax loss carry-forwards arising from mergers of Group companies were claimed for tax purposes. The positive impact on income-tax expense in 2013 amounted to CHF 21 million (prior year: CHF 19 million).
Deferred tax assets and liabilities
Movements in current tax assets and liabilities are to be analysed as follows:
In CHF million | 2013 | 2012 | ||
---|---|---|---|---|
Current income (tax assets) tax liabilities at 1 January, net | 134 | (8) | ||
Recognised in income statement | 302 | 337 | ||
Recognised in other comprehensive income | 3 | – | ||
Income taxes paid in Switzerland | (307) | (145) | ||
Income taxes paid in foreign countries | 29 | (45) | ||
Additions from acquisition of subsidiaries | 1 | – | ||
Interest on arrears | – | (5) | ||
Current income tax liabilities (income tax assets) at 31 December, net | 162 | 134 | ||
Thereof current income tax assets | (22) | (55) | ||
Thereof current income tax liabilities | 184 | 189 | ||
Thereof Switzerland | 168 | 163 | ||
Thereof foreign country | (6) | (29) |
Recognised deferred tax assets and liabilities are to be analysed as follows:
31.12.2013 |
31.12.2012 restated |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
In CHF million |
Assets |
Liabilities |
Net amount |
Assets |
Liabilities |
Net amount |
||||||
Trade and other receivables | 22 | (23) | (1) | 43 | (22) | 21 | ||||||
Property, plant and equipment | 41 | (342) | (301) | 45 | (288) | (243) | ||||||
Intangible assets | – | (364) | (364) | – | (380) | (380) | ||||||
Defined benefit obligations | 268 | – | 268 | 419 | – | 419 | ||||||
Tax loss carry-forwards | 203 | – | 203 | 165 | – | 165 | ||||||
Other | 85 | (67) | 18 | 100 | (33) | 67 | ||||||
Total tax assets (tax liabilities) | 619 | (796) | (177) | 772 | (723) | 49 | ||||||
Thereof deferred tax assets | 279 | 285 | ||||||||||
Thereof deferred tax liabilities | (456) | (236) | ||||||||||
Thereof Switzerland | (328) | (46) | ||||||||||
Thereof foreign countries | 151 | 95 |
Deferred tax assets and liabilities have changed as follows:
In CHF million |
Balance at 31.12.2012 restated |
Recognised in income statement |
Recognised in other compre- hensive income |
Change in scope of consoli- dation |
Foreign currency translation adjustments |
Balance at 31.12.2013 |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Trade and other receivables | 21 | (22) | – | – | – | (1) | ||||||
Property, plant and equipment | (243) | (57) | – | (4) | 3 | (301) | ||||||
Intangible assets | (380) | 32 | – | (13) | (3) | (364) | ||||||
Defined benefit obligations | 419 | 16 | (169) | 2 | – | 268 | ||||||
Tax loss carry-forwards | 165 | 36 | – | – | 2 | 203 | ||||||
Other | 67 | (37) | (12) | – | – | 18 | ||||||
Total | 49 | (32) | (181) | (15) | 2 | (177) |
In CHF million |
Balance at 31.12.2011 restated |
Recognised in income statement |
Recognised in other compre- hensive income |
Change in scope of consoli- dation |
Foreign currency translation adjustments |
Balance at 31.12.2012 restated |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Trade and other receivables | 31 | (10) | – | – | – | 21 | ||||||
Property, plant and equipment | (167) | (76) | – | – | – | (243) | ||||||
Intangible assets | (407) | 27 | – | (2) | 2 | (380) | ||||||
Defined benefit obligations | 301 | (32) | 151 | – | (1) | 419 | ||||||
Tax loss carry-forwards | 139 | 27 | – | – | (1) | 165 | ||||||
Other | 79 | (17) | 6 | – | (1) | 67 | ||||||
Total | (24) | (81) | 157 | (2) | (1) | 49 |
Deferred tax assets relating to unused tax loss carry-forwards and to deductible temporary differences are recognised if it is probable that they can be offset against future taxable profits or existing temporary differences. At as 31 December 2013, various subsidiaries recognised deferred tax assets on tax loss carry-forwards and other temporary differences totalling CHF 619 million (prior year: CHF 772 million) since it was foreseeable that tax loss carry-forwards could be offset against future taxable profits. Of this amount, tax loss carry-forwards and other temporary differences of CHF 247 million (prior year: CHF 301 million) were recognised by subsidiaries reporting a loss in 2012 or 2013. On the basis of the approved business plans of these subsidiaries, Swisscom considers it probable that the tax loss carry-forwards and temporary differences can be offset against future taxable profits.
Tax loss carry-forwards and other temporary differences for which no deferred tax assets were recorded, expire as follows:
In CHF million | 31.12.2013 | 31.12.2012 | ||
---|---|---|---|---|
Expiring within 1 year | 1 | 2 | ||
Expiring within 1 to 2 years | 1 | 9 | ||
Expiring within 2 to 3 years | – | 38 | ||
Expiring within 3 to 4 years | – | 5 | ||
Expiring within 4 to 5 years | 8 | 14 | ||
Expiring within 5 to 6 years | 8 | 27 | ||
Expiring within 6 to 7 years | 23 | 43 | ||
No expiration | 134 | 220 | ||
Total unrecognised tax loss carry-forwards | 175 | 358 | ||
Thereof Switzerland | 23 | 125 | ||
Thereof foreign country | 152 | 233 |
Deferred tax liabilities of CHF 6 million (prior year: CHF none) were recognised on the undistributed earnings of subsidiaries as of 31 December 2013. Temporary differences of subsidiary and associated companies, on which no deferred income taxes were recognised as of 31 December 2013, amounted to CHF 1,264 million (prior year: CHF 534 million).