Canon 2006 Annual Report Download - page 81

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79
Domestic and foreign components of income before income
taxes and minority interests, and the current and deferred
(14) Income Taxes
income tax expense (benefit) attributable to such income are
summarized as follows:
Year ended December 31 Millions of yen
Japanese Foreign Total
2006: Income before income taxes and minority interests ¥556,759 162,384 719,143
Income taxes:
Current ¥201,022 54,156 255,178
Deferred (73) (6,872) (6,945)
¥200,949 47,284 248,233
2005: Income before income taxes and minority interests ¥492,709 119,295 612,004
Income taxes:
Current ¥172,595 40,956 213,551
Deferred 3,441 (4,207) (766)
¥176,036 36,749 212,785
2004: Income before income taxes and minority interests ¥447,864 104,252 552,116
Income taxes:
Current ¥162,679 22,275 184,954
Deferred (1,065) 10,125 9,060
¥161,614 32,400 194,014
Thousands of U.S. dollars
Japanese Foreign Total
2006: Income before income taxes and minority interests $4,678,647 1,364,571 6,043,218
Income taxes:
Current $1,689,260 455,092 2,144,352
Deferred (613) (57,748) (58,361)
$1,688,647 397,344 2,085,991
The Company and its domestic subsidiaries are subject to a
number of income taxes, which, in the aggregate, represent a
statutory income tax rate of approximately 40% for the years
ended December 31, 2006 and 2005, and 42% for the year
ended December 31, 2004.
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 utilized for deferred
tax assets and liabilities expected to be settled or realized
subsequent to January 1, 2005 is approximately 40%.
Areconciliation 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:
Year ended December 31 2006 2005 2004
Japanese statutory income tax rate 40.0% 40.0% 42.0%
Increase (reduction) in income taxes resulting from:
Expenses not deductible for tax purposes 0.3 0.3 0.4
Tax benefits not recognized on operating losses of subsidiaries —— 0.1
Income of foreign subsidiaries taxed at lower than Japanese statutory tax rate (2.1) (1.9) (2.1)
Tax credit for research and development expenses (4.1) (3.9) (4.0)
Other 0.4 0.3 (1.3)
Effective income tax rate 34.5% 34.8% 35.1%