Cemex 2009 Annual Report Download - page 71

69
Changes to the consolidated valuation allowance of deferred tax assets in 2009, 2008 and 2007 were as follows:
2009 2008 2007
Balance at the beginning of the period $ (27,194) (21,093) (14,690)
Increases (18,638) (5,652) (10,289)
Decreases 2 13,547 1,571 3,421
Translation effects 206 (2,020) (681)
Restatement effects – – 1,146
Balance at the end of the period $ (32,079) (27,194) (21,093)
The change in consolidated deferred income taxes during 2009, 2008 and 2007 were as follows:
2009 2008 2007
Deferred income tax charged to the income statement $ 19,255 30,971 336
Deferred income tax in stockholders’ equity 3 941 (362) (427)
Reclassification to other captions in the balance sheet 1,060 – –
Change in deferred income tax for the period $ 21,256 30,609 (91)
1 In 2008, the liability related to the new income tax law in Mexico is presented net of tax loss and tax credit carryforwards to be amortized.
2 Includes in 2009 the reclassification of the liability related to the new income tax law in Mexico.
3 The change in stockholders’ equity for 2009 includes $585 related to the effect generated for the future tax deduction of the debt component of the convertible securities
(note 2). In 2008, this includes a debit of $920 related to the initial effect of deferred tax liabilities on investment in associates, recognized within “Retained earnings,” and
a credit of $558 related to the deferred tax asset on items directly recognized in stockholders’ equity.
CEMEX believes that sufficient taxable income will be generated as to realize the tax benefits associated with the deferred income tax assets and tax
loss carryforwards, prior to their expiration. Nevertheless, a valuation allowance is recorded for the deferred tax assets on tax loss carryforwards that are
estimated and may not be recoverable in the future. In the event that present conditions change, and it is determined that future operations would not
generate sufficient taxable income, the valuation allowance on deferred tax assets would be increased against the results of the period.
CEMEX, S.A.B de C.V. has not provided for any deferred tax liability for the undistributed earnings generated by its subsidiaries, recognized under the equity
method, considering that such undistributed earnings are expected to be reinvested and not generating income tax in the foreseeable future. Likewise,
CEMEX does not recognize a deferred income tax liability related to its investments in subsidiaries and interests in joint ventures, considering that CEMEX
controls the reversal of the temporary differences arising from these investments.
C) Effective tax rate
Differences between the financial reporting and the corresponding tax basis of assets and liabilities and the different income tax rates and laws applicable
to CEMEX, among other factors, give rise to permanent differences between the statutory tax rate applicable in Mexico, and the effective tax rate
presented in the consolidated income statements, which in 2009, 2008 and 2007 were as follows:
2009 2008 2007
% % %
Consolidated statutory tax rate (28.0) (28.0) 28.0
Non-taxable dividend income (7.4) (15.6) (4.3)
Other non-taxable income 1 (179.9) (32.6) (14.1)
Expenses and other non-deductible items 30.8 25.3 10.1
Non-taxable sale of marketable securities and fixed assets (86.9) (7.4) (2.9)
Difference between book and tax inflation 27.1 8.0 0.1
Other tax non-accounting benefits (0.5) (8.6) –
Foreign exchange fluctuations 2 12.8 (37.8) (2.8)
Others 4.3 (4.3) 0.3
Effective consolidated tax rate (227.7) (101.0) 14.4
1 Includes the effects of the different income tax rates in the countries where CEMEX operates.
2 Includes the effects of foreign exchange fluctuations recognized as translation effects (note 17B).