Visa 2009 Annual Report Download - page 114
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Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
The income tax expense differs from the amount of income tax determined by applying the applicable U.S. federal statutory rate of 35% to pretax
income, as a result of the following:
For the Years Ended September 30
2009 2008 2007
Dollars Percent Dollars Percent Dollars Percent
(in millions)
U.S. federal income tax $ 1,400 35% $ 467 35% $ (485) 35%
State income taxes, net of federal benefit 156 4% 43 3% (11) 1%
Non-U.S. tax effect, net of federal benefit 7 — 13 1% — —
Reserve for tax uncertainties related to litigation 4 — 103 8% 180 (13)%
Other, net 30 1% 21 2% 2 —
One-time adjustments:
Benefit from remeasurement of deferred taxes due to state apportionment decrease — — (115) (9)% — —
Non-U.S. tax on sale of VisaNet do Brasil, net of federal benefit 51 1% — — — —
Minority interest—not subject to tax — — — — (2) —
Income tax (benefit) expense $ 1,648 41% $ 532 40% $ (316) 23%
The difference between the effective income tax rates for fiscal 2008 and fiscal 2009 is primarily due to the additional non-U.S. tax in fiscal 2009 on the
sale of the investment in VisaNet do Brasil, the litigation tax reserves in fiscal 2008, and a one-time rate reduction in fiscal 2008 from the combined effect of
the loss of a California special deduction upon IPO and the deferred tax remeasurement benefit due to the change in state tax apportionment.
The effective income tax rate for fiscal 2008 differs from that for fiscal 2007 primarily due to the tax reserves related to litigation, and the one time rate
reduction in fiscal 2008 described above.
Income taxes receivable of $135 million and $90 million are included in prepaid and other current assets at September 30, 2009 and 2008, respectively.
See Note 6—Prepaid Expenses and Other Assets. Income taxes payable of $23 million are included in accrued taxes as part of accrued liabilities at
September 30, 2009, and accrued income taxes of $304 million and $122 million are included in other long-term liabilities at September 30, 2009 and 2008,
respectively. See Note 9—Accrued and Other Liabilities.
Cumulative undistributed earnings of the Company's international subsidiaries amounted to $276 million at September 30, 2009, all of which are
intended to be reinvested indefinitely outside the U.S. The amount of income taxes that would have resulted had such earnings been repatriated is not
practically determinable.
Beginning October 1, 2008, the Company's subsidiary in Singapore operates under a tax incentive agreement which is effective through September 30,
2014, and may be extended through September 30, 2023, if certain additional requirements are satisfied. The tax incentive agreement is
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