Volvo 2008 Annual Report Download - page 100
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Notes to consolidated fi nancial statements
96
THE VOLVO GROUP
Financial information 2008
Note 12 Income taxes
Income taxes were distributed as follows:
2007 2008
Current taxes relating to the period (5,203) (4,349)
Adjustment of current taxes
for prior periods (20) (45)
Deferred taxes originated or
reversed during the period (1,548) 352
Recognition and derecognition
of deferred tax assets 242 48
Total income taxes (6,529) (3,994)
Provisions have been made for estimated tax charges that may arise
as a result of prior tax audits in the Volvo Group. Volvo evaluates tax
processes on a regular basis and makes provisions for possible out-
come when it is probable that Volvo will have to pay more taxes and
when it is possible to make a reasonably assessment of the possible
outcome. Tax claims for which no provision has been deemed neces-
sary were reported as contingent liabilities.
Deferred taxes relate to income taxes payable or recoverable in
future periods in respect of taxable temporary differences, deductible
temporary differences, unused tax loss carryforwards or unused tax
credit carryforwards. Deferred tax assets are recognized to the extent
that it is probable that the amount can be utilized against future tax-
able income. At December 31, 2008, the valuation allowance attribut-
able to deductible temporary differences, unused tax loss carryfor-
wards and unused tax credit carryforwards for which no deferred tax
asset was recognized amounted to 245 (156).
Deferred taxes of 899 (neg 70) have at December 31, 2008, been
accounted for as a direct increase of equity. It is related to fair value of
derivative instruments.
At year-end 2008, the Group had unused tax loss carryforwards
amounting to 5,600 (3,900). These loss carryforwards expire accord-
ing to the adjoining table.
Due date 2007 2008
Within 1 year 500 100
Within 2 years 200 100
Within 3 years 0 400
Within 4 years 100 100
Within 5 years 100 100
After 6 years 3,000 4,800
Total 3,900 5,600
The Swedish corporate income tax rate is 28%. The table below
shows the principal reasons for the difference between this rate and
the Group’s tax rate, based on income after fi nancial items.
2007, % 2008, %
Swedish corporate income tax rates 28 28
Difference in tax rate in various countries 44
Capital gains 0 (1)
Other non-taxable income (2) 0
Other non-deductible expenses 10
Adjustment of current taxes for prior years (1) 0
Recognition and derecognition of deferred
tax assets (1) 0
Other, net 1 (2)
Income tax rate for the Group 30 29