Volvo 2009 Annual Report Download - page 88

Notes to consolidated financial statements
Note 12 Income taxes
Income taxes were distributed as follows:
2008 2009
Current taxes relating to the period (4,349) (989)
Adjustment of current taxes
for prior periods (45) (73)
Deferred taxes originated or
reversed during the period 352 6,981
Recognition and derecognition
of deferred tax assets 48 (30)
Total income taxes (3,994) 5,889
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, 2009, 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 296 (245). The major part of the
reserve consists of unused loss carryforwards.
Accumulated deferred taxes of 816 (neg 899) have at December
31, 2009, been accounted for as a direct decrease of equity. It is
related to fair value of derivative instruments.
At year-end 2009, the Group had unused tax loss carryforwards
amounting to 30,200 (5,600). These loss carryforwards expire
according to the table below:
Due date 2008 2009
Within 1 year 100 300
Within 2 years 100 100
Within 3 years 400 100
Within 4 years 100 400
Within 5 years 100 800
After 5 years 4,800 28,500
Total 5,600 30,200
The Swedish corporate income tax rate is 26,3% (28%). The table
below shows the principal reasons for the difference between this
rate and the Group’s tax rate, based on income after financial items.
2008, % 2009, %
Swedish corporate income tax rates128 26
Difference in tax rate in various countries 4 2
Capital gains (1) 0
Other non-taxable income 0 0
Other non-deductible expenses 0 0
Adjustment of current taxes for prior years 0 1
Recognition and derecognition of deferred
tax assets 0 1
Other, net (2) (1)
Income tax rate for the Group 29 29
1 As from January 1, 2009 the Swedish tax rate was reduced from 28% to
26,3%.
FINANCIAL INFORMATION 2009
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