GE 2014 Annual Report Download - page 84

64 GE 2014 FORM 10-K
MD&A OTHER CONSOLIDATED INFORMATION
GE and GECC file a consolidated U.S. federal income tax return. This enables GE to use GECC tax deductions and credits to
reduce the tax that otherwise would have been payable by GE. The GECC effective tax rate for each period reflects the benefit
of these tax reductions in the consolidated return. GE makes cash payments to GECC for these tax reductions at the time
GE’s tax payments are due.
CONSOLIDATED
(Dollars in billions)
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2014 – 2013 COMMENTARY
x The increase in the consolidated provision for income taxes was attributable in part to decreased benefits from lower-
taxed global operations including the absence of the 2013 benefits related to the sale of 68.5% of our Swiss consumer
finance bank, Cembra Money Bank AG (Cembra), through an IPO, partially offset by the benefits from the 2014 tax
efficient disposition of GEMB-Nordic.
x The income tax provision also increased due to the non-repeat of the favorable resolution of audit matters in 2013.
x The higher income tax provision also reflects an increase in income taxed at rates above the average tax rate.
2013 – 2012 COMMENTARY
x The decrease in the consolidated provision for income taxes was primarily attributable to an increase in tax benefits on
lower-taxed global operations, including the tax benefit on the sale of a portion of Cembra.
x The income tax provision was also lower due to favorable resolution of audit matters and lower income taxed at rates
above the average tax rate.
x These decreases were partially offset by the absence of the 2012 benefit attributable to the high tax basis in the entity
sold in the Business Property disposition.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted and the law extended several provisions,
including a two-year extension of the U.S. tax provision deferring tax on active financial services income and certain U.S.
business credits, retroactive to January 1, 2012. Under accounting rules, a tax law change is taken into account in calculating
the income tax provision in the period enacted. Because the extension was enacted into law in 2013, tax expense in 2013
reflected retroactive extension of the previously expired provisions.
BENEFITS FROM GLOBAL OPERATIONS
Our consolidated income tax rate is lower than the U.S. statutory rate primarily because of benefits from lower-taxed global
operations, including the use of global funding structures. There is a benefit from global operations as non-U.S. income is
subject to local country tax rates that are significantly below the 35% U.S. statutory rate. These non-U.S. earnings have been
CASH INCOME TAXES PAID PROVISION FOR INCOME TAXES EFFECTIVE TAX RATE (ETR)