Volvo 1999 Annual Report Download - page 66

The Volvo Group
64
Income after financial items was distributed as follows:
1997 1998 1999
Sweden 8,828 7,089 31,268
Outside Sweden 4,464 4,070 2,763
Share of income (loss) in associated companies (116) 460 565
Total 13,176 11,619 34,596
Tax expense was distributed as follows:
1997 1998 1999
Current taxes:
Sweden (133) (975) (812)
Outside Sweden (2,145) (1,553) (651)
Subtotal (2,278) (2,528) (1,463)
Deferred taxes:
Sweden (366) (72) (480)
Outside Sweden 164 (480) (6)
Subtotal (202) (552) (486)
Associated companies (103) (60) (321)
Total taxes (2,583) (3,140) (2,270)
Tax expense pertains to current as well as deferred tax in
Swedish and foreign companies.
Provision has been made for estimated tax charges
that may arise as a result of prior tax audits in the Volvo
Group. Tax claims for which no provision has been
deemed necessary of approximately 2,754 (1,442; 699)
are included among contingent liabilities.
The gain on the sale of Volvo Cars amounted to SEK
26.7 billion. On November 25, 1999 Sweden’s Supreme
Administrative Court confirmed the preliminary decision
of the Tax Board that AB Volvo’s sale of Volvo Cars did
not result in a taxable capital gain.
Deferred taxes relate to estimated tax on the change
in tax loss carryforwards and temporary differences.
1997, % 1998, % 1999, %
Swedish corporate income tax rates 28 28 28
Difference in tax rate in various countries 2 4 1
Capital gains (13) (8) (23)
Utilization of tax-loss carryforwards (2) (2) 0
Losses for which no benefit has been recognized 2 3 1
Non-deductable expenses 2 1 0
Amortization of goodwill 0 1 1
Other, net 1 (1) (2)
Tax rate for the Group, excluding equity method 20 26 6
Equity method 1 (1) 1
Tax rate for the Group 21 25 7
Deferred tax assets are reported to the extent that it is
probable that the amount can be utilized against future
taxable income.
At year-end 1999, the Group had tax loss carry-
forwards of about 2,800, of which approximately 1,700
was recognized in calculating deferred taxes.
Accordingly, tax loss carryforwards of about 1,100
may be utilized to reduce tax expense in future years, of
which about 450 expires within five years. Tax loss carry-
forwards in Swedish companies do not expire.
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.
Tax es Note 10
Other financial income and expenses include exchange gains amounting to 372 (164; 206).
Other financial incom e and expenses Note 9