11 Income taxes
11.1 Income taxes in statement of profit or loss and reconciliation
| 2015 | 2016 |
CHF 1,000 |
|
|
Current income taxes | 11,251 | 10,748 |
Deferred income taxes | (2,391) | 138 |
|
|
|
Total income taxes | 8,860 | 10,886 |
The income tax expense can be analyzed as follows:
| 2015 | 2016 |
CHF 1,000 |
|
|
Profit before taxes | 66,007 | 65,428 |
|
|
|
Tax expense based on the Group’s weighted average rate of 19.95% (2015: 20.7%) | 13,690 | 13,050 |
|
|
|
Non-deductible expenses and additional taxable income | 1,031 | 2,115 |
Tax-free income and tax reductions | (5,519) | (5,229) |
Tax-deductible write-off of investments in subsidiaries | (705) | (96) |
Change in funding of employee participation plans | (559) | – |
Effect of tax rate change on opening deferred taxes | 467 | 210 |
Changes in recognition of tax losses | (2) | 166 |
Unrecoverable withholding tax | 167 | (84) |
Underprovided in prior years | 290 | 754 |
|
|
|
Tax expense reported | 8,860 | 10,886 |
The tax rate of the Group is the weighted average tax rate obtained by applying the currently effective rate for each individual jurisdiction to its respective profit before taxes. As a result of changes in the country mix of the profit before taxes, the Group’s expected tax rate for 2016 decreased to 19.95%.
Due to the sale of all treasury shares in the first half of 2015, the outstanding employee share options and the employee shares are covered only by the conditional share capital and no longer by treasury shares. This change in funding of the employee participation plans was resulting in a one-time tax benefit of CHF 0.8 million, of which CHF 0.6 million was recognized in the statement of profit or loss and CHF 0.2 million in equity.
11.2 Deferred income taxes
11.2.1 Overview
Deferred taxes are included in the balance sheet as follows:
| 2015 | 2016 |
CHF 1,000 |
|
|
Deferred tax assets | 14,653 | 16,204 |
Deferred tax liabilities | (6,176) | (14,752) |
|
|
|
Net deferred tax asset at December 31 | 8,477 | 1,452 |
Deferred tax assets and liabilities are attributable to the following:
| 2015 | Change 2016 | 2016 |
CHF 1,000 |
|
|
|
Net deferred tax assets arising from temporary differences |
|
|
|
Receivables | 3,860 | (4,135) | (275) |
Inventories | (409) | 5,315 | 4,906 |
Property, plant and equipment | (1,503) | 405 | (1,098) |
Intangible assets | (3,878) | (7,459) | (11,337) |
Liabilities and accrued expenses | 8,573 | (280) | 8,293 |
Provisions | 1,249 | 1,738 | 2,987 |
Other | (515) | (75) | (590) |
Subtotal net deferred tax assets arising from temporary differences | 7,377 | (4,491) | 2,886 |
|
|
|
|
Deferred taxes provided on expected dividends from subsidiaries | (1,838) | 84 | (1,754) |
Potential tax benefits from tax loss carry-forwards | 2,938 | (2,618) | 320 |
|
|
|
|
Net deferred tax asset at December 31 | 8,477 | (7,025) | 1,452 |
|
|
|
|
Deferred taxes recognized in profit or loss | 2,391 |
| (138) |
Deferred taxes recognized in other comprehensive income | (739) |
| 569 |
Deferred taxes recognized in equity | 791 |
| (283) |
Acquisition through business combination | 1,709 |
| (7,049) |
Translation differences | 50 |
| (124) |
Total change compared with previous year | 4,202 |
| (7,025) |
Temporary differences on intangible assets primarily relate to assets recognized during the purchase price allocation process for business combinations.
11.2.2 Potential tax benefits from tax loss-carry forwards
Tax loss carry-forwards:
| Gross value of tax loss carry forwards not | Potential tax benefits | ||
CHF 1,000 | 2015 | 2016 | 2015 | 2016 |
Expiring in |
|
|
|
|
1st – 5th year |
|
| 2,182 | – |
6th year or beyond |
|
| 214 | – |
Unlimited |
|
| 542 | 320 |
|
|
|
|
|
Tax loss carry-forwards capitalized at December 31 |
|
| 2,938 | 320 |
|
|
|
|
|
Expiring in |
|
|
|
|
1st – 5th year | 784 | 977 | 196 | 244 |
6th year or beyond | – | – | – | – |
Unlimited | – | – | – | – |
|
|
|
|
|
Tax loss carry-forwards not capitalized | 784 | 977 | 196 | 244 |
|
|
|
|
|
Total tax loss carry-forwards | 784 | 977 | 3,134 | 564 |
Due to the decided and anticipated changes in company structure, potential tax benefits in the amount of CHF 0.2 million were not capitalized.
11.2.3 Unrecognized deferred tax liabilities
At December 31, 2016, there were temporary differences of CHF 179.6 million related to investments in subsidiaries for which no deferred tax liabilities were recognized since the Group controls the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. The corresponding unrecognized amount is not material.
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