Mercedes 1999 Annual Report Download - page 93

(in millions of €, except per share amounts)
A reconciliation of income taxes determined using the German cor-
porate tax rate of 42.2% (1998: 47.475%; 1997: 48.375%) plus the af-
ter federal tax benefit rate for trade taxes of 9.3% (1998: 8.525%;
1997: 8.625%) for a combined statutory rate of 51.5% in 1999
(1998: 56%; 1997: 57%) is as follows:
Deferred income tax assets and liabilities are summarized as fol-
lows:
At December 31, 1999, the Group had corporate tax net operating
losses (“NOLs”) and credit carryforwards amounting to €2,232
(1998: €1,724) and German trade tax NOLs amounting to €1,352
(1998: €2,156). In 1999, the corporate tax NOLs and credit
carryforwards relate to losses of foreign and domestic non-
Organschaft companies and are partly limited in their use to the
Group. The valuation allowances on deferred tax assets of foreign
and domestic operations decreased by €48. In future periods, de-
pending upon the financial results, management’s estimate of the
amount of the deferred tax assets considered realizable may
change, and hence the valuation allowances may increase or de-
crease.
Expected expense for income taxes
Effect of changes in 1999 German
tax laws
Change of solidarity surcharge
in 1997
Credit for dividend distributions
Foreign tax rate differential
Release of valuation allowances on
German deferred tax assets
as of December 31, 1997
Changes in valuation allowances on
German deferred tax assets
Write-downs of investments, different
for tax purposes
Amortization of non-deductible
goodwill
Other
Actual expense (benefit)
for income taxes
1997
Year ended December 31,
4,973 4,532 3,503
812 – –
––68
(500) (515) (1,624)
(966) (1,012) (813)
– – (1,003)
23 112 (465)
(28) (18) (240)
33 78 55
186 (163) 2
4,533 3,014 (517)
19981999
The 1999 and 1998 income tax credits from dividend distributions
amounted to €500 and €515, respectively, and reflected mainly the
tax benefits from the dividend distributions of €2.35 per Ordinary
Share to be paid in respect of 1999 and 1998.
The 1997 income tax credit from dividend distributions amounted
to €1,624 and reflected primarily a tax benefit of €1,487 from the
special distribution. This benefit resulted from the refund of taxes
previously paid on undistributed profits at a rate of 50% in excess
of the effective tax rate of 30% on distributed profits.
In 1997, the decrease in the consolidated domestic valuation allow-
ances was due in part to €465 utilization of tax loss carryforwards.
Additionally, €1,003 was due to the reversal of the remaining
valuation allowances as of December 31, 1997 for the German
companies included in the filing of a combined tax return
(“Organschaft”) on the basis that the current and the expected re-
sults of operations supported a conclusion that it was more likely
than not that the deferred tax assets would be realized.
During 1997, the Group sold its investment in Cap Gemini Sogeti
S.A. and realized a gain of €420 in its consolidated financial state-
ments which was not taxable since write-downs were previously
not recognized for tax purposes.
1998
December 31,
Property, plant and equipment
Equipment on operating leases
Investments and long-term financial assets
Inventories
Receivables
Net operating loss and tax credit carryforwards
Retirement plans
Other accrued liabilities
Liabilities
Deferred income
Other
Valuation allowances
Deferred tax assets
Property, plant and equipment
Equipment on operating leases
Inventories
Receivables
Prepaid expenses
Retirement plans
Other accrued liabilities
Taxes on undistributed earnings of foreign
subsidiaries
Other
Deferred tax liabilities
Deferred tax assets (liabilities), net
1,217 2,063
920 1,068
1,983 97
1,424 1,328
993 527
1,011 1,056
3,662 3,880
4,248 4,166
1,482 846
1,246 1,144
490 452
18,676 16,627
(363) (411)
18,313 16,216
(3,346) (2,743)
(5,600) (4,252)
(499) (483)
(3,278) (3,645)
(508) (450)
(4,127) (2,069)
(671) (367)
(520) (297)
(1,150) (1,059)
(19,699) (15,365)
(1,386) 851
1999
NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME
87