Citibank 2013 Annual Report Download - page 215

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The following are the major tax jurisdictions in which the Company and
its affiliates operate and the earliest tax year subject to examination:
Jurisdiction Tax year
United States 2009
Mexico 2008
New York State and City 2005
United Kingdom 2012
India 2009
Brazil 2009
Singapore 2007
Hong Kong 2007
Ireland 2010
Foreign Earnings
Foreign pretax earnings approximated $13.1 billion in 2013, $14.7 billion
in 2012 and $13.1 billion in 2011 (of which $0.1 billion, $0.0 billion
and $0.1 billion, respectively, are in Discontinued operations). As a U.S.
corporation, Citigroup and its U.S. subsidiaries are subject to U.S. taxation
on all foreign pretax earnings earned by a foreign branch. Pretax earnings of
a foreign subsidiary or affiliate are subject to U.S. taxation when effectively
repatriated. The Company provides income taxes on the undistributed
earnings of non-U.S. subsidiaries except to the extent that such earnings are
indefinitely reinvested outside the United States.
At December 31, 2013, $43.8 billion of accumulated undistributed
earnings of non-U.S. subsidiaries was indefinitely invested. At the existing
U.S. federal income tax rate, additional taxes (net of U.S. foreign tax
credits) of $11.7 billion would have to be provided if such earnings were
remitted currently. The current year’s effect on the income tax expense
from continuing operations is included in the “Foreign income tax rate
differential” line in the reconciliation of the federal statutory rate to the
Company’s effective income tax rate in the table above.
Income taxes are not provided for the Company’s “savings bank base year
bad debt reserves” that arose before 1988, because under current U.S. tax
rules, such taxes will become payable only to the extent such amounts are
distributed in excess of limits prescribed by federal law. At December 31, 2013,
the amount of the base year reserves totaled approximately $358 million
(subject to a tax of $125 million).
Deferred Tax Assets
As of December 31, 2013 and 2012, Citi had no valuation allowance on
its DTAs.
In billions of dollars
Jurisdiction/component
DTA balance
December 31, 2013
DTA balance
December 31, 2012
U.S. federal (1)
Net operating losses (NOLs) (2) $ 1.4 $ 0.8
Foreign tax credits (FTCs) (3) 19.6 22.0
Consolidated tax return general
business credits (GBCs) 2.5 2.6
Future tax deductions and credits 21.5 22.0
Other —0.1
Total U.S. federal $45.0 $47.5
State and local
New York NOLs $ 1.4 $ 1.3
Other state NOLs 0.5 0.6
Future tax deductions 2.4 2.6
Total state and local $ 4.3 $ 4.5
Foreign
APB 23 subsidiary NOLs $ 0.2 $ 0.2
Non-APB 23 subsidiary NOLs 1.2 1.2
Future tax deductions 2.1 1.9
Total foreign $ 3.5 $ 3.3
Total $52.8 $55.3
(1) Included in the net U.S. federal DTAs of $45.0 billion as of December 31, 2013 were deferred tax
liabilities of $2 billion that will reverse in the relevant carry-forward period and may be used to support
the DTAs.
(2) Includes $0.6 billion and $0.8 billion for 2013 and 2012, respectively, of NOL carry-forwards related
to non-consolidated tax return companies that are expected to be utilized separately from Citigroup’s
consolidated tax return and $0.8 billion of non-consolidated tax return NOL carry-forwards for 2013
that are eventually expected to be utilized in Citigroup’s consolidated tax return.
(3) Includes $0.7 billion of non-consolidated tax return FTC carry-forwards that are eventually expected to
be utilized in Citigroup’s consolidated tax return.