Citibank 2015 Annual Report Download - page 195

177
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 2012
Mexico 2009
New York State and City 2006
United Kingdom 2014
India 2011
Brazil 2011
Singapore 2010
Hong Kong 2009
Ireland 2011
Foreign Earnings
Foreign pretax earnings approximated $11.3 billion in 2015, $10.1 billion
in 2014 and $13.1 billion in 2013. As a U.S. corporation, Citigroup and its
U.S. subsidiaries are currently 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, 2015, $45.2 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 $12.7 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, 2015,
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, 2015 and 2014, Citi had no valuation allowance on its
DTAs. The following table summarizes Citi’s DTAs.
In billions of dollars
Jurisdiction/component
DTAs balance
December 31, 2015
DTAs balance
December 31, 2014
U.S. federal (1)
Net operating losses (NOLs) (2) $ 3.4 $ 2.3
Foreign tax credits (FTCs) (3) 15.9 17.6
General business credits (GBCs) 1.3 1.6
Future tax deductions and credits 20.7 21.1
Total U.S. federal $41.3 $42.6
State and local
New York NOLs $ 2.4 $ 1.5
Other state NOLs 0.3 0.4
Future tax deductions 1.2 2.0
Total state and local $ 3.9 $ 3.9
Foreign
APB 23 subsidiary NOLs $ 0.2 $ 0.2
Non-APB 23 subsidiary NOLs 0.4 0.5
Future tax deductions 2.0 2.1
Total foreign $ 2.6 $ 2.8
Total $47.8 $49.3
(1) Included in the net U.S. federal DTAs of $41.3 billion as of December 31, 2015 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 $0.5 billion and $0.6 billion for 2015 and 2014, 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 $2.9 billion and $1.7 billion of non-consolidated tax return NOL carry-
forwards for 2015 and 2014, respectively, that are eventually expected to be utilized in Citigroup’s
consolidated tax return.
(3) Includes $1.7 billion and $1.0 billion for 2015 and 2014, respectively, of non-consolidated tax return
FTC carry-forwards that are eventually expected to be utilized in Citigroup’s consolidated tax return.