Nokia 2005 Annual Report Download - page 169

Notes to the Consolidated Financial Statements (Continued)
13. Income taxes (Continued)
The differences between income tax expense computed at statutory rates (in Finland 26% in 2005
and 29% in 2004 and 2003) and income taxes recognised in the consolidated income statement is
reconciled as follows at December 31:
2004 2003
2005 As revised As revised
EURm EURm EURm
Income tax expense at statutory rate ......................... 1,295 1,372 1,555
Amortization of goodwill ................................. —28 46
Impairment of goodwill .................................. ——58
Provisions without income tax benefit/expense ............... 11 ——
Taxes for prior years .................................... 1(34) 56
Taxes on foreign subsidiaries’ profits in excess of (lower than)
income taxes at statutory rates .......................... (30) (130) (77)
Operating losses with no current tax benefit ................. ——8
Net increase in provisions ................................ 22 67 14
Change in deferred tax rate ............................... —26 —
Deferred tax liability on undistributed earnings ............... 860 —
Adoption of IAS 39(R) and IFRS 2 ........................... —11 (2)
Other ................................................. (26) 46 39
Income tax expense ....................................... 1,281 1,446 1,697
At December 31, 2005, the Group had loss carry forwards, primarily attributable to foreign
subsidiaries of EUR 92 million (EUR 105 million in 2004 and EUR 186 million in 2003), most of
which will expire between 2006 and 2023.
In the beginning of 2005, the corporate tax rate in Finland was reduced from 29% to 26%. The
impact of the change on the Profit and loss account through change in deferred taxes in 2004 was
EUR 26 million. In 2005, there was no impact on the Profit and loss account through a change in
deferred tax.
Income taxes include a tax benefit from a tax refund from previous years of EUR 48 million in
2005.
Certain of the Group companies’ income tax returns for periods ranging from 1998 through 2004
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 As a result of this analysis, the Group concluded that it could no longer
represent that all foreign earnings may be permanently reinvested.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 in 2004. In 2005, the deferred
tax liability was EUR 68 million.
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