Canon 2003 Annual Report Download - page 69

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67
The Company and certain of its domestic subsidiaries are
subject to a corporate tax of 30%, an inhabitant tax of 9.8% and a
deductible business tax of 6%, which in the aggregate resulted in
a statutory income tax rate of approximately 42%.
Amendments to the Japanese tax regulations were enacted on
March 24, 2003. As a result of these amendments, the statutory
income tax rate was reduced from approximately 42% to 40%
effective from the year beginning January 1, 2005. Consequently,
the statutory tax rate is to be lowered to approximately 40%
2003 2002 2001
Japanese statutory income tax rate 42.0% 42.0% 42.0%
Increase (reduction) in income taxes resulting from:
Expenses not deductible for tax purposes 0.2 0.5 1.4
Tax benefits not recognized on operating losses of subsidiaries 0.1 0.2 0.9
Income of foreign subsidiaries taxed at lower than Japanese normal tax rate (2.5) (2.5) (2.0)
Tax credit for increased research and development expenses (1.4) (1.6) (2.1)
Effect of enacted changes in tax laws and rates on research and development expenses (2.6) ——
Effect of enacted changes in tax laws and rates on business taxes 0.8 ——
Other (0.3) 2.2 0.7
Effective income tax rate 36.3% 40.8% 40.9%
Net deferred income tax assets and liabilities are reflected on
the accompanying consolidated balance sheets under the
following captions:
Thousands of
Millions of yen U.S. dollars
2003 2002 2003
Prepaid expenses and other current assets ¥44,198 42,386 $413,065
Other assets 124,706 167,298 1,165,477
Other current liabilities (2,575) (1,213) (24,065)
Other noncurrent liabilities (19,302) (16,120) (180,393)
¥147,027 192,351 $1,374,084
applicable for deferred tax assets and liabilities expected to be
settled or realized subsequent to January 1, 2005. The
adjustments of deferred tax assets and liabilities for this change in
the tax rate are ¥3,613 million ($33,766 thousand) and have
been reflected in the consolidated statements of income for the
year ended December 31, 2003.
A reconciliation of the Japanese statutory income tax rate and
the effective income tax rate as a percentage of income before
income taxes is as follows: