DELPHI 2012 Annual Report Download - page 113

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The provision (benefit) for income taxes is comprised of:
Year ended
December 31,
2012
Year ended
December 31,
2011
Year ended
December 31,
2010
(in millions)
Current income tax expense:
U.S. federal............................................................................................ $ 71 $ 104 $ 98
Non-U.S................................................................................................. 199 232 164
U.S. state and local................................................................................ 5 5 10
Total current...................................................................................... 275 341 272
Deferred income tax (benefit) expense, net:
U.S. federal............................................................................................ 24 (45)(17)
Non-U.S................................................................................................. (88) 12 3
U.S. state and local................................................................................ 1 (3) —
Total deferred.................................................................................... (63)(36)(14)
Total income tax provision (benefit)............................................ $ 212 $ 305 $ 258
Cash paid or withheld for income taxes was $280 million, $303 million and $254 million for the years ended
December 31, 2012, 2011 and 2010, respectively.
For purposes of comparability and consistency, the Company uses the notional U.S. federal income tax rate when
presenting the Company’s reconciliation of the income tax provision. The Company is a U.K. resident taxpayer and as such is
not generally subject to U.K. tax on remitted foreign earnings. As a result, the Company does not anticipate foreign earnings
would be subject to a 35% tax rate upon repatriation to the U.K., as is the case when U.S. based companies repatriate earnings
to the U.S. A reconciliation of the provision for income taxes compared with the amounts at the notional U.S. federal statutory
rate was:
Year Ended December 31,
2012 2011 2010
(in millions)
Notional U.S. federal income taxes at statutory rate .................................................... $ 471 $ 527 330
Income taxed at other rates........................................................................................... (200)(225)(22)
Change in valuation allowance..................................................................................... (29)(52)(21)
Other change in tax reserves......................................................................................... (13) 17 (2)
Withholding taxes......................................................................................................... 22 56 24
Tax credits..................................................................................................................... (13)(26)(29)
Change in tax law ......................................................................................................... 6 13 (15)
Tax settlements............................................................................................................. (26) — —
Other adjustments......................................................................................................... (6)(5)(7)
Total income tax expense...................................................................................... $ 212 $ 305 258
Effective tax rate........................................................................................................... 16% 20% 27%
The Company’s tax rate is affected by the tax rates in the jurisdictions in which the Company operates, the relative
amount of income earned by jurisdiction, jurisdictions with a statutory tax rate less than the U.S. rate of 35% and the relative
amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance. Included in the
non-U.S. incomes taxes at other rates are tax incentives obtained in various non-U.S. countries, primarily the Hi-Tech
Enterprise status in China, the Special Economic Zone exemption in Turkey and the Maquiladora regime in Mexico of $41
million and $64 million in 2012 and 2011, respectively, and tax benefit for income earned in jurisdictions where a valuation
allowance has been recorded, primarily Luxembourg, of $47 million and $65 million, in 2012 and 2011, respectively.
The effective tax rate for the year ended December 31, 2012 was impacted by the release of $29 million of valuation
allowances, a favorable tax settlement of $26 million, a $30 million reduction in tax reserves due to resolution of open issues
with tax authorities offset by an increase of $17 million primarily related to uncertain tax positions outside the United States.
The effective tax rate in the year ended December 31, 2011 was impacted by the release of $52 million of valuation allowances,
offset by an increase of $10 million in withholding tax expense primarily related to the funding of the redemption of all the
outstanding Class A and Class C membership interests in Delphi Automotive LLP and $27 million related to changes in our