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12  Income taxes

 

12.1  Income taxes in statement of profit or loss and reconciliation

 

2017 
(Restated)

2018

CHF 1,000

 

 

Current income taxes 

 14,763

16,537

Deferred income taxes

(1,701)

(3,835)

 

 

 

Total income taxes 

13,062

12,702

 

The income tax expense can be analyzed as follows:

 

 

2017 

(Restated)

2018

CHF 1,000

 

 

Profit before taxes 

78,992

83,398

 

 

 

Tax expense based on the Group’s weighted average rate of 20.82% (2017: 21.99%)

17,373

17,360

 

 

 

Non-deductible expenses and additional taxable income

260

609

Tax-free income and tax reductions

(5,375)

(5,021)

Potential tax assets not recognized

194

Tax-deductible impairments of investments in subsidiaries (including reversal)

(114)

(91)

Impact of acquisitions

 794

(540)

Effect of US tax reform1

 4

Effect of tax rate change on opening deferred taxes (2017 excluding US)

 25

(377)

Impact of tax losses

 (40)

260

Unrecoverable withholding tax

 (91)

216

Underprovided in prior years 

 32

286

 

 

 

Tax expense reported 

13,062

12,702

  1. Effect of adjusting the existing deferred taxes on the enactment date (December 22, 2017) and applying the new (lower) tax rate on changes in temporary differences after that date

 

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 2018 decreased to 20.82%. 

 

12.2  Deferred income taxes

 

12.2.1  Overview

Deferred taxes are included in the balance sheet as follows:

 

 

01.01.2017

(Restated)

31.12.2017

(Restated)

31.12.2018

CHF 1,000

 

 

 

Deferred tax assets

16,204

15,342

18,689

Deferred tax liabilities

(14,794)

(11,561)

(6,593)

 

 

 

 

Total net deferred tax assets

1,410

3,781

12,096

 

Deferred tax assets and liabilities are attributable to the following:

 

 

01.01.2017 
(Restated)

31.12.2017 
(Restated)

Change 2018

31.12.2018

CHF 1,000

 

 

 

 

Net deferred tax assets arising from temporary

  ­differences

 

 

 

 

  Receivables and contract assets

(259)

(139)

(14)

(153)

  Inventories

4,684

4,419

1,213

5,632

  Property, plant and equipment

(1,098)

(453)

408

(45)

  Intangible assets

(11,337)

(7,577)

(2,508)

(10,085)

  Liabilities and accrued expenses

8,419

9,059

116

9,175

  Provisions

3,025

1,087

818

1,905

  Other

(590)

(1,073)

848

(225)

  Subtotal net deferred tax assets arising from temporary

    differences

2,844

5,323

881

6,204

 

 

 

 

 

Deferred taxes provided on expected dividends from

  ­subsidiaries

(1,754)

(1,663)

(216)

(1,879)

Potential tax benefits from tax loss carry-forwards

320

121

7,650

7,771

 

 

 

 

 

Total net deferred tax assets

1,410

3,781

8,315

12,096

 

 

 

 

 

Deferred taxes recognized in profit or loss

 

1,701

 

3,835

Deferred taxes recognized in other comprehensive income

 

608

 

(539)

Deferred taxes recognized in equity

 

259

 

(625)

Acquisition through business combination

 

(218)

 

5,641

Translation differences

 

21

 

3

Total change compared with previous year

 

2,371

 

8,315

 

Temporary differences on intangible assets primarily relate to assets recognized during the purchase price allocation process for business combinations.

 

12.2.2  Potential tax benefits from tax loss carry-forwards

Tax loss carry-forwards:

 

 

Gross value of tax loss carry-forwards
not capitalized

Potential tax benefits

 

31.12.2017

31.12.2018

31.12.2017

31.12.2018

CHF 1,000

 

 

 

 

Expiring in 

 

 

 

 

  1st – 5th year

 

 

876

  6th year or beyond

 

 

5,939

  Unlimited

 

 

 121 

956

 

 

 

 

 

Tax loss carry-forwards capitalized

 

 

 121 

7,771

 

 

 

 

 

Expiring in 

 

 

 

 

  1st – 5th year

 –

  6th year or beyond

21,816

1,312

  Unlimited

 

 

 

 

 

Tax loss carry-forwards not capitalized

21,816

1,312

 

 

 

 

 

Total tax loss carry-forwards

21,816

 121

9,083

 

12.2.3  Unrecognized deferred tax liabilities

At December 31, 2018, there were temporary differences of CHF 331.0 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.