Mercedes 2003 Annual Report Download - page 139
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Please find page 139 of the 2003 Mercedes 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.9. Income Taxes
Income (loss) before income taxes consists of the following:
The income (loss) in Germany includes the income (loss) from com-
panies included at equity if the shares of those companies
are held by German companies. In 2003, the write-down of the
investment in EADS of €1,960 million is also included.
Income tax expense (benefit) is comprised of the following com-
ponents:
For German companies, the deferred taxes at December 31, 2003
were calculated using a federal corporate tax rate of 25% (2002:
26.5% for deferred taxes which will reverse in 2003 and 25% for
deferred taxes which will reverse after 2003; 2001: 25%). Deferred
taxes were also calculated with a solidarity surcharge of 5.5% for
each year on federal corporate taxes plus the after federal tax be-
nefit rate for trade tax of 12.125% (2002: 11.842% for deferred
taxes which will reverse in 2003 and 12.125% for deferred taxes
which will reverse after 2003; 2001: 12.125%). Including the impact
of the surcharge and the trade tax, the tax rate applied to German
deferred taxes amounted to 38.5% (2002: 39.8% for deferred taxes
which will reverse in 2003 and 38.5% for deferred taxes which will
reverse after 2003; 2001: 38.5%).
In 2003, the German government enacted new tax legislation
which, among other changes, provides that, beginning January 1,
2004, 5% of dividends received from German companies and 5%
from certain gains from the sale of shares in affiliated and unaffili-
ated companies are no longer tax-free while losses from the sale of
shares in affiliated and unaffiliated companies continue to be non-
deductible. The change in tax legislation resulted in a deferred tax
expense due to the deferred tax liabilities on the unrealized gains.
The effect of the increase in the deferred tax liabilities of the
Group’s German companies was recognized in the year of enact-
ment and as a result, a deferred tax expense of €64 million was
included in the consolidated statement of income (loss) in 2003.
In 2002, the German government enacted new tax legislation for
the purpose of financing the flood disaster which, among other
changes, increased the Group’s statutory corporate tax rate for
German companies from 25% to 26.5%, effective only for the calen-
dar year 2003. The effect of the increase in the tax rate on the
deferred tax assets and liabilities of the Group’s German compa-
nies was recognized in the year of enactment and as a result, a net
charge of €3 million was included in the consolidated statement of
income (loss) in 2002.
The effect of the tax law changes in Germany in 2003 and 2002
are reflected separately in the reconciliations presented below.
A reconciliation of expected income tax expense (benefit) to
actual income tax expense (benefit) determined using the applica-
ble German corporate tax rate for the calendar year of 26.5%
(2002 and 2001: 25%) plus a solidarity surcharge of 5.5% on feder-
al corporate taxes payable plus the after federal tax benefit rate for
trade taxes of 11.842% (2002 and 2001: 12.125%) for a combined
statutory rate of 39.8% in 2003 (2002 and 2001: 38.5%) is as fol-
lows:
In 2002, income tax credits from dividend distribution reflected the
tax benefit from the 2001 dividend distribution of €1.00 per Ordi-
nary Share paid in 2002.
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134
(in millions of €)
4,301
(5,955)
(1,654)
2001
4,205
1,720
5,925
(736)
1,332
596
20022003
Germany
Non-German countries
Year ended December 31,
(in millions of €)
2001
1,141
(286)
(441)
701
1,115
766
(432)
172
473
979
20022003
705
(512)
642
(1,684)
(849)
Current taxes
Germany
Non-German countries
Deferred taxes
Germany
Non-German countries
Year ended December 31,
(in millions of €)
2001
2003 2002
237
(489)
–
(37)
–
780
159
–
269
64
–
(4)
979
2,281
(247)
(1,012)
(34)
–
–
1
–
178
3
(57)
2
1,115
(637)
97
(191)
(54)
29
–
(25)
5
(99)
–
–
26
(849)
Expected expense (benefit) for income taxes
Tax rate differential with non-German countries
Gains from sales of business interests
(T-Systems ITS, TEMIC, Adtranz, debitel)
Trade tax rate differential
Changes in valuation allowances on German
deferred tax assets
Non-deductible equity method investment
impairment
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 DCAG
Other
Actual expense (benefit) for income taxes
Year ended December 31,