Cemex 2012 Annual Report Download - page 148

Notes to the
financial
statements
148
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On January 1, 2008, a new law became effective in Mexico, which was named the Minimum Corporate Tax law (Impuesto
Empresarial Tasa Única or “IETU”) and superseded the Business Asset Tax law (“BAT”). IETU is calculated based on cash flows,
and the rate was 16.5% in 2008, 17% in 2009 and 17.5% in 2010 and thereafter. Entities subject to IETU are also required to
determine income tax and pay the greater of the amounts between the two. In broad terms, taxable revenues for IETU purposes
are those generated through the sale of goods, the rendering of professional services, as well as rental revenue. There are certain
exceptions, and a taxpayer may consider as deductible items for IETU calculations the expenses incurred to conduct the activities
previously described. Capital expenditures are fully deductible for IETU. Each entity must calculate IETU on a stand-alone basis,
and tax consolidation is not permitted. Unlike BAT, IETU is a definitive tax and, unlike income tax, the taxable income under IETU
is greater since some deductions are not permitted, which in some cases may be compensated by the lower IETU rate than the
income tax rate. During 2012, 2011 and 2010, the CEMEX, S.A.B. de C.V. and its main subsidiaries in México paid income tax.
BAT levied in excess of income tax for the period may be recovered, restated for inflation, in any of the succeeding ten years,
provided that the income tax incurred exceeds BAT in such period. CEMEX, S.A.B. de C.V. determines income tax on a consolidated
basis; consequently, it calculated and presented consolidated BAT through the 2007 tax period. As of December 31, 2012, the
recoverable BAT was $146 and expires in 2016.
12B) Deferred income taxes
The effect of deferred income taxes for the period represents the difference between the income tax balances at the beginning and
end of the period. As of December 31, 2012 and 2011 the temporary differences that generated the deferred income tax assets
and liabilities of CEMEX, S.A.B. de C.V. are presented below:
2012 2011
Deferred tax assets:
Tax loss carryforwards and other tax credits $ 2,206 5,197
Advance payments and convertible securities 1,513 277
Derivative financial instruments 2,617 1,682
Issuance cost of debt 302 297
Total deferred tax assets 6,638 7,453
Deferred tax liabilities:
Land and buildings (510) (530)
Derivative financial instruments (1,210) (330)
Convertible securities (608) (940)
Investments in associates (1,028) (1,068)
Total deferred tax liabilities (3,356) (2,868)
Net deferred tax assets $ 3,282 4,585
The change in deferred income taxes for the years 2012 and 2011 includes an expense of approximately $31 for both periods,
related to equity issuance expenses, recognized in other equity reserves. CEMEX, S.A.B. de C.V.’s management considers that
sucient taxable income will be generated in the future to realize the tax benefits associated with deferred income tax assets
and tax loss carryforwards, prior to their expiration. In the event that present conditions change and it is determined that future
operations would not generate enough taxable income, CEMEX, S.A.B. de C.V. would not recognize such asset.
CEMEX, S.A.B. de C.V. does not recognize a deferred tax liability for the undistributed earnings generated by its subsidiaries,
considering that such undistributed earnings are expected to be reinvested and not generating taxable income in the foreseeable
future. Furthermore, CEMEX, S.A.B. de C.V. does not recognize a deferred tax liability related to its investments in subsidiaries,
considering that it controls the reversal of the temporary differences arising from these investments.