BMW 2003 Annual Report Download - page 82

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where, deferred tax expense was reduced by euro
11 million. In the previous year, the deferred tax
expense was increased by euro 7 million as a result
of changes in tax rates.
No taxes arose in conjunction with extraordinary
items or from the discontinuation of operations in
the year under report. The income tax expense does
not include any amounts relating to changes in ac-
counting policies.
Deferred taxes were not recognised on retained
profits of euro 9,419 million (2002: euro 8,973 mil-
lion), as it is intended to invest these profits to main-
tain and expand the business volume of the relevant
companies. A computation was not made of the
potential impact of income taxes on the grounds of
disproportionate expense.
Deferred tax assets and liabilities at 31 December
were attributable to the positions, as shown below. For
the year under report, deferred tax assets and liabilities
relating to provisions were offset against
each other
within the appropriate position, whereas in the pre-
vious year, the offsetting effect was shown on the line
“netting”. Comparative figures have been reclassified.
The increase in current taxes is mainly attribut-
able to the fact that tax losses arising in the USA in
conjunction with the Worker Assistance and Job
Creation Act could not, unlike the previous year, be
fully offset against taxable income.
The reduction in the deferred tax expense
relates to the first-time recognition of deferred tax
assets of euro192 million on the tax losses which
cannot be carried back in the USA.
Deferred taxes are computed using tax rates
based on laws already enacted in the various tax
jurisdictions or using rates that are expected to apply
at the date when the amounts are paid or recovered.
In Germany, on the basis of the one-off effect of
the Flood Victims Solidarity Act applicable for 2003,
a corporation tax rate of 26.5% applies. After taking
account of the average multiplier rate (Hebesatz)
of 410% for municipal trade tax and the solidarity
charge of 5.5%, the overall tax rate for BMW com-
panies in Germany is 40.21% (2002: 38.9%). The
tax rates for companies outside Germany range
from 10.0% to 41.7% (2002: 10.0% to 42.0%).
As a result of changed tax rates in Germany and else-
in euro million Deferred tax assets Deferred tax liabilities
2003 2002 2003 2002
Intangible assets and property, plant and equipment 1,304 1,424 4,003 3,732
Financial assets 1 122
Current assets 867 601 4,130 3,687
Ta x loss carryforwards 1,117 1,556 ––
Provisions 721 729 23 56
Liabilities 2,419 2,592 543 400
Consolidations 1,186 1,099 139 120
7,615 8,002 8,840 7,997
Valuation allowance – 1,101 –1,305 ––
Netting – 6,339 – 6,505 – 6,339 – 6,505
175 192 2,501 1,492