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72 Fujitsu Limited
11. Income Taxes
The Group is subject to a number of different income taxes. The statutory tax rates in the aggregate in Japan
were approximately 42.0% for the year ended March 31, 2004, and approximately 40.6% for the years ended
March 31, 2005 and 2006.
The components of income taxes are as follows:
Yen U.S. Dollars
(millions) (thousands)
Years ended March 31 2004 2005 2006 2006
Current ¥34,125 ¥ 32,422 ¥36,831 $312,127
Deferred 58,085 153,131 196 1,661
Income taxes ¥92,210 ¥185,553 ¥37,027 $313,788
The reconciliations between the applicable statutory income tax rate and the effective income tax rate
for the years ended March 31, 2004, 2005 and 2006 are as follows:
Years ended March 31 2004 2005 2006
Statutory income tax rate 42.0% 40.6% 40.6%
Increase (Decrease) in tax rate:
Tax effect on prior losses on investments in
equity method affiliates — — (9.4%)
Amortization of goodwill 8.1% 2.1% 5.3%
Valuation allowance for deferred tax assets 53.2% 45.7% (3.4%)
Non-deductible expenses for tax purposes 1.7% 1.3% 2.3%
Non-taxable income (0.6%) (0.5%) (0.8%)
Tax effect on equity in earnings of
affiliates, net (1.1%) (1.7%) 0.5%
Adjustment of net gain on sale of investments
in subsidiaries and affiliated companies 26.6% (2.3%) —
Tax effect on prior losses on investments
in subsidiaries (72.5%) — —
Other 1.3% (2.2%) (3.7%)
Effective income tax rate 58.7% 83.0% 31.4%