Cemex 2012 Annual Report Download - page 97

Notes to the
consolidated
financial
statements
97
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As of December 31, 2012, CEMEX’s deferred tax loss carryforwards that have been recognized expire as follows:
Amount of
unreserved
carryforwards
2013 $ 921
2014 7,230
2015 7,027
2016 12,426
2017 and thereafter 70,375
$ 97,979
In connection with CEMEX’s deferred tax loss carryforwards presented in the table above, as of December 31, 2012, in order
to realize the benefits associated with such deferred tax assets that have not been reserved, before their expiration, CEMEX
would need to generate approximately $97,979 in consolidated pre-tax income in future periods. For the years ended December
31, 2012, 2011 and 2010, CEMEX has reported pre-tax losses on a worldwide consolidated basis. Nonetheless, based on the
same forecasts of future cash flows and operating results used by CEMEX’s management to allocate resources and evaluate
performance in the countries in which CEMEX operates, which include expected growth in revenues and reductions in interest
expense in several countries due to a reduction in intra-group debt balances, along with the implementation of feasible tax
strategies, CEMEX believes that it will recover the balance of its tax loss carryforwards that have not been reserved before their
expiration. In addition, CEMEX concluded that, the deferred tax liabilities that were considered in the analysis of recoverability of
its deferred tax assets will reverse in the same period and tax jurisdiction of the related recognized deferred tax assets. Moreover,
a certain amount of CEMEX’s deferred tax assets refer to operating segments and tax jurisdictions in which CEMEX is currently
generating taxable income or in which, according to CEMEX’s management cash flow projections, will generate taxable income
in the relevant periods before the expiration of the deferred tax assets, considering that the amount of taxable income required
to recover CEMEX’s deferred tax assets over the next four years is not significant, and that approximately $70,375 out of the
$97,979 of consolidated pre-tax income mentioned above would be required over several years in 2017 and thereafter.
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 to not
generate 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.
19C) 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 statements of operations, which in 2012, 2011 and
2010 were as follows:
2012 2011 2010
% % %
Consolidated statutory tax rate (30.0) (30.0) (30.0)
Non-taxable dividend income (0.7) (1.9) –
Expenses and other non-deductible items 7.7 53.4 10.3
Unrecognized tax benefits in the year (44.6) 34.8 (33.2)
Non-taxable sale of marketable securities and fixed assets (14.2) (14.4) 22.1
Difference between book and tax inflation 34.0 9.9 12.3
Other tax non-accounting benefits 1 166.4 45.9 33.3
Others 0.4 (0.5) 3.4
Effective consolidated tax rate 119.0 97.2 18.2
1 Includes: a) the effects of the different income tax rates in the countries where CEMEX operates and other permanent differences; b) changes
during the period related to deferred tax assets originated by tax loss carryforwards (note 19B); and c) changes in the balance of provisions for tax
uncertainties during the period, as described in note 19D.