HSBC 2001 Annual Report Download - page 48

HSBC HOLDINGS PLC
Financial Review (continued)
46
Analysis of overall tax charge
Year ended 31 December
Figures in US$m 2001 2000 1999
Taxation at UK corporate
tax rate of 30.0% (2000:30.0%
1999: 30.25%)...................... 2,400 2,932 2,415
Impact of differently taxed
overseas profits in principal
locations................................... (616) (498) (418)
Unrecognised (previously
unrecognised) tax benefits.... (499) (137) 35
Tax free gains ........................... (102) (15 )
–
Argentine losses........................ 336
–
–
Goodwill amortisatio
n
............... 263 172 11
Other items ............................... (208 ) (216) (5 )
1,574 2,238 2,038
Year ended 31 December 2001 compared with
year ended 31 December 2000
HSBC Holdings and its subsidiary undertakings in
the United Kingdom provided for UK corporation
taxation at 30 per cent, the rate for the calendar year
2001 (2000: 30 per cent). Overseas tax included
Hong Kong profits tax of US$450 million (2000:
US$478 million), provided at a rate of 16 per cent
(2000: 16 per cent) on the profits assessable in Hong
Kong. Other overseas taxation was provided for in
the countries of operation at the appropriate rates of
taxation.
HSBC’s effective tax rate of 19.7 per cent in
2001 was lower than that for 2000 (22.9 per cent)
mainly as a result of profit mix, untaxed disposal
gains and resolution of a number of tax uncertainties
allowing recognition of previously unrecognised
benefits.
As a result of changes in the UK basis of
taxation of overseas income, there was a release of
the remaining balance of a deferred tax provision
previously held in respect of additional UK tax on
profit remittances from overseas. Settlement of a
number of outstanding tax computations allowed
release of related tax contingencies including one
relating to a material capital allowance claim. In
addition, certain capital gains have been covered by
previously unrecognised capital losses, allied to the
fact that tax-free gains in Hong Kong were greater in
2001 than in 2000. North American operations
represented a lower percentage of HSBC’s profits in
2001 than in 2000. No tax relief has been assumed in
2001 for the additional general bad debt provision in
respect of Argentina.
At 31 December 2001, there were potential
future tax benefits of US$220 million (2000: US$350
million) in respect of trading losses, allowable
expenditure charged to the profit and loss account
but not yet allowable for tax and capital losses which
have not yet been recognised because realisation of
the benefits is not considered certain.
Year ended 31 December 2000 compared with
year ended 31 December 1999
HSBC Holdings and its subsidiary undertakings in
the United Kingdom provided for UK corporation
tax at 30 per cent, the rate for the calendar year 2000,
compared with 30.25 per cent in 1999. Overseas tax
included Hong Kong profits tax of US$478 million,
compared with US$367 million in 1999, provided at
a rate of 16.0 per cent for both years on the profits
assessable in Hong Kong. Other overseas taxation
was provided for in the countries of operation at the
appropriate rates of taxation.
At 31 December 2000, there were potential
future tax benefits of approximately US$350 million
compared with US$520 million at 31 December
1999, in respect of trading losses, allowable
expenditure charged to the profit and loss account
but not yet allowed for tax and capital losses which
have not been recognised because realisation of the
benefits is not considered certain.
Asset deployment
At 31 December 2001 At 31 December 2000
US$m % US$
m
%
Loans and
advances to
customers......... 308,649 44.9 289,837 43.5
Loans and
advances to
b
anks................ 104,641 15.2 126,032 18.9
Debt securities...... 160,579 23.4 132,818 20.0
Treasury bills an
d
other eligible
b
ills.................. 17,971 2.6 23,131 3.5
Equity shares ........ 8,057 1.2 8,104 1.2
Intangible fixed
assets ................. 14,581 2.1 15,089 2.3
Othe
r
.................... 72,762 10.6 70,610 10.6
687,240 100.0 665,621 100.0
Hong Kong SAR
Government
certificates of
indebtedness .... 8,637 8,193
Total assets ........... 695,877 673,814
Loans and advances to
customers include:
–
reverse repos...... 14,823 12,158
– settlement
accounts ........... 11,761 6,954
Loans and advances to banks
include:
–
reverse repos...... 10,926 12,341
– settlement
accounts ........... 4,433 6,745