Cemex 2013 Annual Report Download - page 165
Download and view the complete annual report
Please find page 165 of the 2013 Cemex annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Notes to the financial statements
15) Tax credits and legal proceedings
InJanuary2011,theMexicantaxauthoritynotiedCEMEX,S.A.B.deC.V.,ofataxassessmentforapproximately$996(US$77)pertaining
tochangestotheincometaxlawapprovedin2005thatpermitsthedeductibilityofthecostofgoodssolddeductedinthedetermination
ofincometaxes,insteadofusingtheamountofpurchases.SincetherewereinventoriesasofDecember31,2004,inatransitionprovision,
thelawallowedtheinventorytobeaccumulatedasincome(thusreversingthedeductionviapurchases)andthenbedeductedfrom2005
onwardsascostofgoodssold.Inordertocomputetheincomeresultingfromtheinventoriesin2004,thelawallowedthisincometobe
offsetagainstaccumulatedtaxlossesofsomeofCEMEX’ssubsidiaries.Theauthoritiesarguedthatbecauseofthisoffsetting,therightto
usesuchlossesattheconsolidatedlevelhadbeenlost;therefore,CEMEXhadtoincreaseitsconsolidatedincomeordecreaseitsconsolidated
losses.CEMEXbelievesthatthereisnolegalsupportfortheconclusionoftheMexicantaxauthorityand,onMarch29,2011,CEMEX
challengedtheassessmentbeforethetaxcourt.DuringMay2013,CEMEXsettledthesetaxassessmentsaspartoftheAmnestyProvision.
PursuanttoamendmentstotheMexicanincometaxlaweffectiveJanuary1,2005,Mexicancompanieswithinvestmentsinforeignentities
whoseincometaxliabilityislessthan75%oftheincometaxthatwouldbepayable inMexico,arerequiredtopaytaxesinMexicoon
netpassiveincome,suchasdividends,royalties,interest,capitalgainsandrentalfeesobtainedbysuchentities,provided,however,that
thoserevenuesare notderivedfromentrepreneurial activities insuch countries.CEMEX, S.A.B.de C.V.challengedthe constitutionality
oftheamendments beforethe Mexicanfederalcourts.InSeptember2008,theSupremeCourtofJusticeruledthe amendmentswere
constitutionalfortaxyears2005to2007.OnMarch1,2012andJuly5,2012,CEMEX,S.A.B.deC.V.self-assessedthetaxescorresponding
tothe2005and2006taxyears,respectively,foratotalamount,inclusiveofsurchargesandcarry-forwardcharges,of approximately
$4,642(US$358)for2005and$1,100(US$86)for2006,ofwhich20%,equivalenttoapproximately$928(US$72)for2005and$221
(US$17)for2006,waspaidinconnectionwiththesubmissionofamendedtaxreturns.Theremaining80%ofsuchtotalamountswould
havebeendueinFebruary2013andJuly2013forthe2005and2006taxyears,respectively,plusadditionalinterestifCEMEXS.A.B.de
C.V.wouldhaveelectedtoextendthepaymentdateinthirty-sixmonthlyinstallments.OnJanuary31,2013inconnectionwiththeAmnesty
Provision,CEMEX,S.A.B.deC.V.reachedasettlementagreementwiththetaxauthoritiesconsistinginasinglenalpaymentaccordingto
therulessetforthbythetransitoryprovision.Changesintheprovisionwererecognizedwithinincometaxexpensein2012.CEMEXpaidthe
agreeduponamountonFebruary1,2013.
InconnectionwiththetaxproceedingrelatedtothetaxespayableinMexicofrompassiveincomegeneratedbyforeigninvestmentsforthe
years2005and2006andthetransitoryamnestyprovisionbothofwhicharedescribedinnote15,onJanuary31,2013,CEMEX,S.A.B.
deC.V.wasnotiedthatanagreementhadbeenreachedwiththeMexicantaxauthoritiesregardingthesettlementofsuchtaxproceeding
pursuanttoanalpaymentaccordingtotherulesofthetransitoryprovision.CEMEX,S.A.B.deC.V.paidtheamountonFebruary1,2013.
16) Subsequent events
Duringtherstandsecondquarterof2014,inordertorunitsoperationsinMexicomoreefcientlyandtofacilitatetheacquisitionof
nancing,CEMEX,S.A.B.deC.V.haslaunchedaninitiativetointegrateitsMexicanbusinessesandoperationalactivitiesinMexicoundera
singleentity.ThisinitiativeconsidersthatthereareefciencyandimprovementopportunitiesbyshiftingfromaplatformwhereCEMEX,
S.A.B.deC.V.servesitscustomersfromdifferententitiesaccordingtoitslineofbusiness(i.e.cement,concrete,aggregates),intoaplatform
wherecustomers,nowsortedbyend-usersegment(i.e.distributor,builder,manufacturer)willbeservicedfromasingleentity.Underthis
initiativeCEMEX,S.A.B.deC.V.willintegrateproductive,commercial,marketingandadministrativeactivitiesrelatedtothesaleofcement,
ready-mixconcrete,aggregatesandotherconstructionmaterialsinMexico.Aspartofthisinitiative,CEMEX,S.A.B.deC.V.,willenterinto
leaseagreementsofproperty,plantandequipment,withCEMEXMéxico,S.A.deC.V.,CEMEXConcretos,S.A.deC.V.andCEMEXAgregados,
S.A.deC.V.,thesecompaniesthathavecarriedoperatingactivitiesuntilDecember31,2013andthebeginningof2014,willceaseto
haveoperatingactivitiesonorafterApril1,2014,andwhilemaintainingpropertyoftheassetswillmainlyactaslessors.Toimplementthe
Mexicanintegrationinitiativeefciently,awhollyownedadministrativetrustwillbeusedtoconcentrateleasepaymentsandobtainnancing.
CEMEX,S.A.B.deC.V.willcontinuetoconsolidatetheentireCEMEXgroup.
OnJanuary13,2014,consideringitsshort-termmaturity,CEMEX,S.A.B.deC.V.initiatedaprocesstoamendthetermsofthecappedcall
optionsmaturingin2015(note10D),usingprevailingmarketvaluationoftheinstrument.AsofJanuary31,2014,theexecutionofthiscash
lessamendmentisstillongoing,whennalizedduringFebruary2014;CEMEX,S.A.B.deC.V.estimatesthatitwillhavetherighttoreceive
themarketvalueofapproximately7.7millionofADSsthroughasamenumberofzero-strikecalloptionsmaturinginMarch2015,whichwill
bemarked-to-marketthroughprotorlossprospectively.
[164]