Mercedes 2001 Annual Report Download - page 94

90 Notes to Consolidated Statements of Income (Loss)
A reconciliation of expected income taxes to actual
income tax expense (benefit) determined using the ap-
plicable German corporate tax rate of 25% (2000: 40%;
1999: 40%) plus a solidarity surcharge of 5.5% on fed-
eral corporate taxes plus the after federal tax benefit
rate for trade taxes of 12.125% (2000: 9.3%; 1999: 9.3%)
for a combined statutory rate of 38.5% in 2001 (2000:
51.5%; 1999: 51.5%) is as follows:
(in millions of €)
Expected expense (benefit)
for income taxes
Tax rate differential with non-
German countries
Gains from sales of business
interests (Adtranz, TEMIC,
debitel)
Trade tax rate differential
Changes in valuation
allowances on German
deferred tax assets
Tax effect of equity method
investments
Amortization of non-deductible
goodwill
Tax free income and non-
deductible expenses
Effect of changes in German
tax laws
Dividend distribution credit at
DC AG
Other
Actual expense (benefit)
for income taxes
(571) 2,305 4,973
96 (346) (966)
(191) ––
(50) (28) (24)
29 –23
(25) 113 ( 12 )
552 33
(76) 48 36
–263 812
–(491) (505)
683 163
(777) 1,999 4,533
1999
Year ended December 31,
20002001
In 2000 and 1999, income tax credits from
dividend distributions reflected the tax benefits from
the dividend distributions of €2.35 per Ordinary Share
to be paid for those years.
Deferred income tax assets and liabilities are
summarized as follows:
Property, plant and equipment
Investments and long-term financial
assets
Equipment on operating leases
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
Securities
Prepaid expenses
Retirement plans
Other accrued liabilities
Taxes on undistributed earnings of
non-German subsidiaries
Other
Deferred tax liabilities
Deferred tax liabilities, net
365 463
2,135 1,986
689 800
697 664
1,369 1,400
3,078 1,669
3,682 3,442
6,340 4,756
1,113 1,114
1,162 1,330
423 427
21,053 18,051
(145) (335)
20,908 17,716
(4,095) (3,609)
(8,286) (7,569)
(385) (303)
(2,542) (2,341)
(448) (33)
(482) (481)
(4,794) (4,409)
(673) (1,010)
(514) (486)
(530) (519)
(22,749) (20,760)
(1,841) (3,044)
At December 31,
20002001
(in millions of €)
At December 31, 2001, the Group had corporate
and trade tax net operating losses (“NOLs”) amounting
to €4,668 million (2000: €4,061 million) and credit
carryforwards amounting to €1,552 million (2000:
€776 million), determined in accordance with U.S.
GAAP. The corporate tax NOLs and credit
carryforwards relate to losses of non-German compa-
nies and German non-Organschaft companies and are
partly limited in their use to the Group. The valuation
allowances on deferred tax assets of German and non-
German operations decreased by €190 million. The re-
duction in the valuation allowance is mainly due to the
sale of Adtranz. In future periods, depending 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 decrease.