Chrysler 2004 Annual Report Download - page 135

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Consolidated Financial Statements at December 31, 2004 – Notes to the Consolidated Financial Statements
Assicurazioni Group (37 million euros), incidental costs and other provisions connected with other sales which took place in 2003 and
in prior years (102 million euros), damages caused by flooding at the Termoli factory (71 million euros) and, lastly, commissions paid to
Mediobanca for the extension of the commitments undertaken by Mediobanca itself under the “Ferrari” contract described in Note
14 (16 million euros). Other extraordinary expenses also included prior years’ expenses of 40 million euros.
20 Income taxes
Income taxes recorded in the consolidated statement of operations in 2004, 2003 and 2002 are as follows:
(in millions of euros) 2004 2003 2002
Current taxes:
IRAP 128 125 141
Other taxes 187 31 192
Total Current taxes 315 156 333
Deferred taxes (344) 494 (887)
Total Income taxes (29) 650 (554)
Income taxes paid by the Group in 2004 and 2003 amounted to 292 million euros and 132 million euros, respectively.
The reconciliation between the tax charge recorded in the consolidated financial statements and the theoretical tax charge,
calculated on the basis of the theoretical tax rates in effect in Italy, is the following:
(in millions of euros) 2004 2003 2002
Theoretical income taxes (520) (441) (1,734)
Utilization of tax loss carryforwards (128) (57) (47)
Tax effect of permanent differences 6136 (325)
Tax effect of difference between foreign tax rates and theoretical Italian tax rates 5(6) 13
Deferred tax assets not provided 459 881 1,361
Other differences 21 12 37
Income taxes recorded in financial statements excluding IRAP
(current and deferred income taxes) (157) 525 (695)
IRAP 128 125 141
Income taxes recorded in financial statements (current and deferred income taxes)(29) 650 (554)
In order to render the reconciliation between income taxes recorded in the financial statements and theoretical income taxes more
meaningful, the IRAP tax is not taken into consideration. Since the IRAP tax has a taxable basis that is different from income before
taxes, it generates distortions between one year and another. Accordingly, the theoretical income taxes were determined by applying
only the tax rate in effect in Italy (IRES equal to 33% in 2004) to the income before taxes.
In 2004 and 2003, as a result of the loss reported by the Group, the effective tax rate is not significant.
With reference to the above reconciliation, the permanent differences include the tax effect on non-taxable income of 226 million
euros in 2004 (148 million euros in 2003) and on nondeductible costs of 232 million euros in 2004 (341 million euros in 2003).
In 2004, Other differences include unrecovered withholdings for 11 million euros (20 million euros in 2003).