MasterCard 2013 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2013 MasterCard annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
91
available under current law to reduce the resulting U.S. income tax liability. However, it is not practicable to determine
the amount of the tax and credits.
The provision for income taxes differs from the amount of income tax determined by applying the U.S. federal statutory
income tax rate of 35.0% to pretax income for the years ended December 31, as a result of the following:
2013 2012 2011
Amount Percent Amount Percent Amount Percent
(in millions, except percentages)
Income before income tax expense . . $ 4,500 $ 3,933 $ 2,748
Federal statutory tax . . . . . . . . . . . . . 1,575 35.0 % 1,376 35.0 % 961 35.0 %
State tax effect, net of federal benefit 19 0.4 % 23 0.6 % 14 0.5 %
Foreign tax effect. . . . . . . . . . . . . . . . (208) (4.6)% (175) (4.4)% (133) (4.9)%
Non-deductible expenses and other
differences . . . . . . . . . . . . . . . . . . . . . 13 0.3 % (21) (0.5)% 34 1.2 %
Tax exempt income . . . . . . . . . . . . . . (1) — % (2) (0.1)% (3) (0.1)%
Foreign repatriation . . . . . . . . . . . . . . (14) (0.3)% (27) (0.7)% (31) (1.1)%
Income tax expense . . . . . . . . . . . . . . $ 1,384 30.8 % $ 1,174 29.9 % $ 842 30.6 %
Effective Income Tax Rate
The effective income tax rates for the years ended December 31, 2013, 2012 and 2011 were 30.8%, 29.9% and 30.6%,
respectively. The effective tax rate for 2013 was higher than the effective tax rate for 2012 primarily due to the
recognition of a discrete benefit relating to additional export incentives in 2012 and a lower benefit related to foreign
repatriations in 2013, which was partially offset by a more favorable mix of earnings in 2013. The effective tax rate
for 2012 was lower than the effective tax rate for 2011 primarily due to discrete benefits related to additional export
incentives and the conclusion of tax examinations in certain jurisdictions, as well as a larger benefit from the domestic
production activities deduction in the U.S. related to the Company's authorization software.
In 2010, in connection with the expansion of the Company's operations in the Asia Pacific, Middle East and Africa
region, the Company's subsidiary in Singapore, MasterCard Asia Pacific Pte. Ltd. (“MAPPL”) received an incentive
grant from the Singapore Ministry of Finance. The incentive had provided MAPPL with, among other benefits, a
reduced income tax rate for the 10-year period commencing January 1, 2010 on taxable income in excess of a base
amount. The Company continued to explore business opportunities in this region, resulting in an expansion of the
incentives being granted by the Ministry of Finance, including a further reduction to the income tax rate on taxable
income in excess of a revised fixed base amount commencing July 1, 2011 and continuing through December 31, 2025.
Without the incentive grant, MAPPL would have been subject to the statutory income tax rate on its earnings. For
2013, 2012 and 2011, the impact of the incentive grant received from the Ministry of Finance resulted in a reduction
of MAPPL's income tax liability of $76 million, or $0.62 per diluted share, $64 million, or $0.51 per diluted share, and
$44 million, or $0.34 per diluted share, respectively.