Nokia 2004 Annual Report Download - page 153

Notes to the Consolidated Financial Statements (Continued)
12. Income taxes
2004 2003 2002
EURm EURm EURm
Income tax expense
Current tax ................................................ (1,392) (1,686) (1,423)
Deferred tax ............................................... (43) (13) (61)
Total ....................................................... (1,435) (1,699) (1,484)
Finland ..................................................... (1,117) (1,118) (1,102)
Other countries ............................................... (318) (581) (382)
Total ....................................................... (1,435) (1,699) (1,484)
The differences between income tax expense computed at statutory rates (29% in Finland in 2004,
2003 and 2002) and income tax expense provided on earnings are as follows at December 31:
2004 2003 2002
EURm EURm EURm
Income tax expense at statutory rate ............................... 1,372 1,555 1,431
Amortization of goodwill ....................................... 28 46 59
Impairment of goodwill ........................................ —58 70
Provisions without income tax benefit/expense ..................... —— (10)
Taxes for prior years .......................................... (34) 56 8
Taxes on foreign subsidiaries’ profits in excess of (lower than) income
taxes at statutory rates ....................................... (130) (77) (59)
Operating losses with no current tax benefit ....................... —86
Net increase in provisions ...................................... 67 14 (39)
Change in deferred tax rate ..................................... 26 ——
Deferred tax liability on undistributed earnings ..................... 60 ——
Other ....................................................... 46 39 18
Income tax expense ............................................. 1,435 1,699 1,484
At December 31, 2004, the Group had loss carry forwards, primarily attributable to foreign
subsidiaries of EUR 105 million (EUR 186 million in 2003 and EUR 425 million in 2002), most of
which will expire between 2005 and 2024.
In 2005, the corporate tax rate in Finland will be reduced from 29% to 26%. The change had no
impact on the current tax expense in 2004. The impact of the change on the Profit and loss
account through change in deferred taxes in 2004 was EUR 26 million.
Certain of the Group companies’ income tax returns for periods ranging from 1998 through 2002
are under examination by tax authorities. The Group does not believe that any significant
additional taxes in excess of those already provided for will arise as a result of the examinations.
During 2004, the Group analyzed its future foreign investment plans with respect to certain
foreign investments. As a result of this analysis, the Group concluded that it could no longer
represent that all foreign earnings may be permanently reinvested. Accordingly, the Group
recorded the recognition of a EUR 60 million deferred tax liability during the year.
F-28