Food Lion 2006 Annual Report Download - page 89

25. Income Taxes
Profit before tax
(in millions of EUR) 2006 2005 2004
Continuing operations 670.6 603.4 557.7
Discontinued operations (68.1) (11.1) (77.7)
Total 602.5 592.3 480.0
Tax expense
(in millions of EUR) 2006 2005 2004
Continuing operations
Current tax 289.9 239.6 159.3
Taxes related to prior years
recorded in the current year 1.5 2.8 -
Recognition in current tax of
previously unrecognized tax
losses and tax credits - (0.9) (0.8)
Deferred tax (45.5) (18.4) 44.5
Recognition in deferred tax of
previously unrecognized tax
losses and tax credits (1.1) (0.4) -
Deferred tax expense (income)
relating to changes in tax
rates or the imposition of
new taxes 0.2 1.1 (2.6)
Total income tax expense
from continuing
operations 245.0 223.8 200.4
Discontinued operations
Deferred tax (2.8) (1.6) (22.2)
Total income tax expense
from discontinued
operations (2.8) (1.6) (22.2)
Continuing and discontinued
operations
Current tax 289.9 239.6 159.3
Taxes related to prior year recorded
in the current year 1.5 2.8 -
Recognition of previously
unrecognized tax losses and
tax credits - (0.9) (0.8)
Deferred tax (48.3) (20.0) 22.3
Recognition in deferred tax of
previously unrecognized tax
losses and tax credits (1.1) (0.4) -
Deferred tax expense (income)
relating to changes in tax rates or
the imposition of new taxes 0.2 1.1 (2.6)
Total income tax expense from
continuing and discontinued
operations 242.2 222.2 178.2
The following is a reconciliation of Delhaize Group’s Belgian statutory income tax
rate to Delhaize Group’s effective income tax rate:
2006 2005 2004
Belgian statutory income tax rate 34.0% 34.0% 34.0%
Items affecting the Belgian statutory
income tax rate:
Taxation in juridictions outside Belgium
(primarily due to United States
federal and state income tax rates
applied to the income of Delhaize
America)
(1)
4.2 3.9 3.5
Not taxable income (3.8) (2.1) (1.9)
Not deductible loss related to
disposal of Delvita 3.6 - -
Effect of unrecognized tax
losses and tax credits 0.3 0.9 1.0
Tax charges on dividend income 1.1 0.7 0.3
Change in enacted rate
(2)
- - (0.5)
Other 0.7 0.1 0.7
Effective tax rate 40.2% 37.5% 37.1%
(1) In 2006, approximately 86% of Delhaize Group’s consolidated profit before tax was attributable to Delhaize
America, which had an effective tax rate of 38.9%.
In 2005, approximately 77% of Delhaize Group’s consolidated profit before tax was attributable to Delhaize
America, which had an effective tax rate of 39.0%.
In 2004, approximately 71% of Delhaize Group’s consolidated profit before tax was attributable to Delhaize
America, which had an effective tax rate of 38.9%.
(2) The Greek statutory tax rate was changed from 35% to 32% for fiscal year 2005, 29% for fiscal year 2006
and 25% for fiscal years starting 2007.
The amount of current and deferred tax charged or (credited) directly to equity
is as follows:
(in millions of EUR) 2006 2005 2004
Current tax (14.6) (6.5) (6.1)
Deferred tax 6.9 0.3 8.8
Total tax credited directly to equity (7.7) (6.2) 2.7
Delhaize Group has not recognized income taxes on undistributed earnings of
certain subsidiaries as the undistributed earnings are permanently reinvested.
The cumulative amount of undistributed earnings on which Delhaize Group has
not recognized income taxes was approximately EUR 1.7 billion, EUR 1.7 billion
and EUR 1.4 billion at December 31, 2006, 2005 and 2004, respectively.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset and when the deferred income taxes relate to the
same fiscal authority. Deferred income taxes recognized on the balance sheet
are as follows:
(in millions of EUR) December 31,
2006 2005 2004
Deferred tax liabilities 186.0 242.5 237.7
Deferred tax assets 7.9 5.5 6.0
Net deferred tax liabilities 178.1 237.0 231.7
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