Mercedes 2012 Annual Report Download - page 203

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9. Income taxes
Profit before income taxes is comprised as shown in table
 7.17.
Profit before income taxes in Germany includes the income/
loss from investments accounted for using the equity method
if the shares of those companies are held by German companies.
Table  7.18 shows the components of income taxes.
The current tax expense includes tax benefits at German
and foreign companies of €1,164 million (2011: €469 million)
recognized for prior periods.
The deferred tax expense is comprised of the components
in table  7.19.
For German companies, in 2012 and 2011, deferred taxes were
calculated using a federal corporate tax rate of 15%, a solidar-
ity tax surcharge of 5.5% on each year’s federal corporate
taxes, plus a trade tax of 14%. In total, the tax rate applied
for the calculation of German deferred taxes in both years
amounted to 29.825%. For non-German companies, the deferred
taxes at period-end were calculated using the tax rates of
the respective countries.
Table  7.20 includes a reconciliation of expected income
tax expense to actual income tax expense determined using
the applicable German combined statutory rate of 29.825%
(2011: 29.825%).
Profit before income taxes
2012 2011
In millions of euros
German companies 3,399 3,976
Non-German companies 4,319 4,473
7,718 8,449
7.17
Components of income taxes
2012 2011
In millions of euros
Current taxes
German companies 353 -731
Non-German companies -540 -1,213
Deferred taxes
German companies -458 -468
Non-German companies -578 -8
-1,223 -2,420
7.18
Components of deferred tax expense
2012 2011
In millions of euros
Deferred taxes -1,036 -476
due to temporary differences -2,831 160
due to tax loss carryforwards and tax credits 1,795 -636
7.19
Reconciliation of expected income tax expense to actual income tax
2012 2011
In millions of euros
Expected income tax expense -2,302 -2,520
Foreign tax rate differential -127 -71
Trade tax rate differential 12 32
Tax law changes -13 -35
Change of valuation allowance
on deferred tax assets
283
182
Tax-free income and non-deductible expenses 945 56
Other -21 -64
Actual income tax expense -1,223 -2,420
7. 2 0