Mondelez 2012 Annual Report Download - page 97

Table of Contents
We are regularly examined by federal and various state and foreign tax authorities. We are currently under various income tax
examinations by the IRS for the years 2006 through 2009. Our income tax filings are also currently under examination by tax
authorities in various U.S. state and foreign jurisdictions, however, under the Tax Sharing and Indemnity Agreements between us
and Kraft Foods Group, Kraft Foods Group is generally liable for all state income tax filings prior to the spin-off. U.S. state and
foreign jurisdictions have statutes of limitations generally ranging from three to five years, however, these statutes are often
extended by mutual agreement with the tax authorities. Years still open to examination by foreign tax authorities in major
jurisdictions include (earliest open tax year in parentheses): Germany (2005), Brazil (2007), France (2009), United Kingdom (2004),
Australia (2008), Russia (2010) and India (2003).
At December 31, 2012, applicable U.S. federal income taxes and foreign withholding taxes had not been provided on approximately
$10.8 billion of accumulated earnings of foreign subsidiaries that are expected to be permanently reinvested. It is impractical for us
to determine the amount of unrecognized deferred tax liabilities on these permanently reinvested earnings.
The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate for the following reasons for the years
ended December 31, 2012, 2011 and 2010:
Our 2012 effective tax rate was favorably impacted by the mix of pre-tax income in various foreign jurisdictions and net tax benefits
of $101 million from discrete one-time events, primarily related to the revaluation of U.K. deferred tax assets and liabilities resulting
from tax legislation enacted during 2012 that reduced U.K. corporate income tax rates and net favorable tax audit settlements,
partially offset by non-deductible expenses.
Our 2011 effective tax rate was favorably impacted by the mix of pre-tax income in various foreign jurisdictions and net tax benefits
of $226 million from discrete one-time events, primarily from the revaluation of U.K. deferred tax assets and liabilities resulting from
tax legislation enacted in 2011 that reduced U.K. corporate income tax rates, the reversal of valuation allowances on certain foreign
deferred tax assets that are now expected to be realized and the net favorable impact from various U.S. federal and foreign tax
audit developments during the year.
Our 2010 effective tax rate was favorably impacted by the mix of pre-tax income in various foreign jurisdictions and net tax benefits
of $165 million from discrete one-time events, primarily from the favorable resolution of U.S. federal and foreign tax audits and the
revaluation of U.K. deferred tax assets and liabilities resulting from tax legislation enacted in 2010 that reduced U.K. corporate
income tax rates, partially offset by a write-off of deferred tax assets as a result of the U.S. health care legislation enacted in March
2010.
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2012
2011
2010
U.S. federal statutory rate
35.0%
35.0%
35.0%
Increase / (decrease) resulting from:
State and local income taxes, net of federal tax
benefit excluding IRS audit impacts
(0.9%)
0.2%
(0.9%)
Foreign rate differences
(20.5%)
(20.8%)
(16.8%)
Federal and state tax impacts related to IRS
audit settlements
(0.4%)
0.1%
(8.4%)
Reversal of other tax accruals no longer required
(3.1%)
(4.9%)
(9.6%)
U.S. Health Care Legislation – –
7.9%
Tax Legislation
(3.9%)
(3.8%)
(6.3%)
Non-deductible expenses
3.6%
1.9%
8.1%
Other
1.9%
(0.1%)
(1.6%)
Effective tax rate
11.7%
7.6%
7.4%