Volvo 1998 Annual Report Download - page 64

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62
NOTE S
Taxes Note 10
Income after financial items was distributed as follows:
1996 1997 1998
Sweden 10,476 8,828 7,089
Outside Sweden 3,437 4,464 4,070
Share of income of associated companies 290 (116) 460
Total 14,203 13,176 11,619
Tax expenses was distributed as follows:
1996 1997 1998
Current taxes:
Sweden (615) (133) (975)
Outside Sweden (1,532) (2,145) (1,553)
Subtotal (2,147) (2,278) (2,528)
Deferred taxes:
Sweden 574 (366) (72)
Outside Sweden (184) 42 (279)
Subtotal 390 (324) (351)
Associated companies (68) (103) (60)
Total taxes (1,825) (2,705) (2,939)
Tax expense pertains mainly to current taxes in Swedish
as well as in foreign companies.
Provision has been made for estimated tax charges
that may arise as a result of prior tax audits in the Volvo
Group. Claims for which no provision has been deemed
necessary are equal to an expense of approximately
1,442 (699; 528). This amount is included among con-
tingent liabilities.
Deferred taxes pertain mainly to an estimated tax on
the change in untaxed reserves, taking into account tax-
loss carryforwards and temporary differences.
At December 31, 1998, the Group had tax-loss carry-
1996, % 1997, % 1998, %
Swedish corporate income tax rate 28 28 28
Difference in tax rate in various countries 1 2 4
Capital gains (losses) (22) (13) (8)
Utilization of tax-loss carryforwards (4) (2) (2)
Losses for which no benefit has been recognized 8 2 3
Non-deductable expenses 3 2 1
Amortization of goodwill 0 0 1
Other, net (1) 1 (1)
Tax rate for the Group, excluding equity method 13 20 26
Equity method 0 1 (1)
Tax rate for the Group 13 21 25
forwards amounting to approximately 3,000. Of this
amount, approximately 500 has been recognized in cal-
culating deferred tax liabilities.
Tax-loss carryforwards amounting to approximately
2,500 can thus be utilized to reduce tax expense in futu-
re years. Of this amount, 500 expires within five years.
Tax-loss carryforwards in Sweden are not restricted
time-wise.
The Swedish corporate income tax rate is 28%. The
table below shows the principal reason for the difference
between this rate and the Group’s tax rate, based on
income after financial items.
Minority interests in profit (loss) and in equity consist
mainly of Henlys Group’s participation in Prévost Car Inc
and Nova BUS Corp (49%) and the minority interests in
The AGES Group, ALP (43%). Up to and including
September 1998 minority interests in profit (loss) also
included Hitachi Construction Machinery Company’s par-
ticipation in Euclid-Hitachi Heavy Equipment Inc (40%),
and up to and including June 1997, General Motors’ hol-
ding in Volvo Trucks North America Inc (13%).
Minority interests Note 11