Canon 2004 Annual Report Download - page 73

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71
The Company and its domestic subsidiaries are subject to a
number of income taxes, which, in the aggregate, indicate a
statutory income tax rate of approximately 42% for the years
ended December 31, 2004, 2003 and 2002.
Amendments to the Japanese tax regulations were
enacted on March 24, 2003. As a result of these
amendments, the statutory income tax rate will be reduced
from approximately 42% to 40% effective from the year
beginning January 1, 2005. Consequently, the statutory tax
rate utilized for deferred tax assets and liabilities expected to
be settled or realized subsequent to January 1, 2005 is
approximately 40%. The adjustments of deferred tax assets
and liabilities for this change in the tax rate amounted to
¥3,613 million and have been reflected in income taxes on 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 and minority interests is as follows:
Net deferred income tax assets and liabilities are reflected
on the accompanying consolidated balance sheets under the
following captions:
Year ended December 31 2004 2003 2002
Japanese statutory income tax rate 42.0% 42.0% 42.0%
Increase (reduction) in income taxes resulting from:
Expenses not deductible for tax purposes 0.4 0.2 0.5
Tax benefits not recognized on operating losses of subsidiaries 0.1 0.1 0.2
Income of foreign subsidiaries taxed at lower than Japanese statutory tax rate (2.1) (2.5) (2.5)
Tax credit for research and development expenses (4.0) (4.0) (1.6)
Effect of enacted changes in tax laws and rates —0.8 —
Other (1.3) (0.3) 2.2
Effective income tax rate 35.1% 36.3% 40.8%
December 31 Thousands of
Millions of yen U.S. dollars
2004 2003 2004
Prepaid expenses and other current assets ¥47,679 44,198 $458,452
Other assets 84,686 124,706 814,288
Other current liabilities (2,873) (2,575) (27,625)
Other noncurrent liabilities (30,049) (19,302) (288,932)
¥99,443 147,027 $956,183