Scania - Annual Report 2006

Scania annual report 2006 74 2006 2005 2004 Reconciliation of effective tax Amount % Amount % Amount % Income after financial items 8,583 6,765 6,276 Tax calculated using Swedish tax rate -2,403 -28 -1,894 -28 -1,757 -28 Tax effect and percentage influence: Difference between Swedish and foreign tax rates -183 -2 -155 -2 -86 -1 Tax-exempt income 176 2 127 2 36 1 Non-deductible expenses -167 -2 -149 -2 -122 -2 Utilisation/valuation of tax loss carry-forwards -11 0 46 0 -30 0 New valuation of other deferred tax 15 0 -18 0 24 0 Adjustment for taxes pertaining to previous years 3 0 -6 0 11 0 Other -74 -1 -51 -1 -36 -1 Effective tax -2,644 -31 -2,100 -31 -1,960 -31 Deferred tax assets and tax liabilities are attributable to the following: 2006 2005 2004 Deferred tax assets Provisions 526 460 434 Provisions for pensions 391 371 146 Non-current assets 573 677 291 Inventories 496 478 416 Unutilised tax loss carry-forwards 4 129 187 300 Other 663 487 451 Offset within tax jurisdictions -2,129 -2,095 -1,655 Total deferred tax assets 649 565 383 Deferred tax liabilities Property, plant and equipment 3,170 3,230 2,741 Tax allocation reserve 5 1,146 943 884 Other 91 62 335 Offset within tax jurisdictions -2,129 -2,095 -1,655 Total deferred tax liabilities 2,278 2,140 2,305 Net deferred tax liabilities 1,629 1,575 1,922 4 Unutilised tax loss carry-forwards in 2006 stemmed mainly from Germany, France and Latin America. Of the deferred tax assets attributable to unutilised tax loss carry-forwards, SEK 112 m. may be utilised without time constraints. 5 I n Sweden, tax laws permit provisions to an untaxed reserve called a tax allocation reserve. Deductions for provisions to this reserve are allowed up to a maximum of 25 percent of taxable profits. Each provision to this reserve may be freely withdrawn and face taxation, and must be withdrawn no later than the sixth year after the provision was made. As of 2005, interest is charged on the provision to the reserve and this expense is recognised as a tax. Reconciliation of net deferred tax liabilities: 2006 2005 2004 Carrying value on 1 January 1,575 1,922 1,897 Deferred taxes recognised in the year’s income -3 -163 17 Exchange rate differences -9 36 13 Reclassifications 20 – – Tax assets/liabilities in acquired businesses – 60 16 Recognised in equity, changes attributable to actuarial gains and losses on pensions -21 -217 -21 hedge reserve 67 -63 – Net deferred tax liabilities, 31 December 1,629 1,575 1,922 Recognised tax assets related to subsidiaries that reported a loss during 2006 were valued on the basis of an assessment that future earnings capacity in each respective company made a valuation possible. In the Scania Group, deferred tax assets related to unutilised tax loss carry-forwards of SEK 225 m. (245 and 243, respectively) were not included after assessment of the potential for utilising the tax loss carry-forwards. Expiration structure of deferred tax assets related to tax loss carry-forwards not recognised 2007 1 2008 1 2009 0 2010 3 2011 28 2012 and thereafter 97 No expiration date 95 Total 225 Note 8, continued