Visa 2011 Annual Report Download - page 124

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2011
(in millions, except as noted)
The income tax provision 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
2011 2010 2009
Dollars Percent Dollars Percent Dollars Percent
(in millions) (in millions) (in millions)
U.S. federal income tax at statutory rate $ 1,980 35% $ 1,623 35% $ 1,400 35%
State income taxes, net of federal benefit 203 4% 177 4% 156 4%
Non-U.S. tax effect, net of federal benefit (150) (2)% (124) (2)% 7 —
Remeasurement of deferred taxes due to change in state apportionment (3) — 15 — — —
Non-U.S. tax on sale of VisaNet do Brasil, net of federal benefit — — — — 51 1%
Revaluation of Visa Europe put option (43) (1)% (28) (1)% — —
Other, net 23 — 11 — 34 1%
Income tax provision $ 2,010 36% $ 1,674 36% $ 1,648 41%
The effective income tax rates in fiscal 2011 and 2010 were lower than the rate in fiscal 2009 primarily due to the benefit of tax incentives in Singapore,
the Company's largest operating hub outside the U.S., beneficial changes in the geographic mix of the Company's global income, the nontaxable revaluations
of the Visa Europe put option in fiscal 2011 and 2010, and the absence of additional foreign tax related to the sale of the investment in VisaNet do Brasil in
fiscal 2009.
Income taxes receivable of $112 million and $140 million are included in prepaid and other current assets at September 30, 2011 and 2010,
respectively. See Note 6—Prepaid Expenses and Other Assets. At September 30, 2011 and 2010, income taxes payable of $63 million and $40 million,
respectively, are included in accrued income taxes as part of accrued liabilities, and accrued income taxes of $468 million and $423 million, respectively, are
included in other long-term liabilities. See Note 9—Accrued and Other Liabilities.
Cumulative undistributed earnings of the Company's international subsidiaries amounted to $1.9 billion at September 30, 2011, 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.
The Company's largest operating hub outside the U.S. is located in Singapore. It 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
conditional upon certain employment and investment thresholds being met by the Company. The tax incentive agreement decreased Singapore tax by $111
million, $93 million and $16 million, and the benefit of the tax incentive agreement on diluted earnings per share was $0.16, $0.13 and $0.02 in fiscal 2011,
2010 and 2009, respectively.
In accordance with ASC 740, the Company is required to inventory, evaluate, and measure all uncertain tax positions taken or to be taken on tax
returns, and to record liabilities for the amount of such positions that may not be sustained, or may only partially be sustained, upon examination by the
relevant taxing authorities.
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