Ryanair 2016 Annual Report Download - page 41

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Independent Auditor’s Report to the Members of Ryanair Holdings plc (continued)
 Evaluating the discount rate used by the Group, including comparison to externally derived-data.
 Assessing whether the related disclosures in the financial statements are appropriate.
Taxation
Refer to page 21 (Audit Committee Report), page 152 (accounting policy) and pages 179 to 181 (financial disclosures).
The risk:
While Ryanair is headquartered, managed and controlled from Ireland, the Group operates extensively across Europe and
also North Africa. Airlines’ profits on international flights are taxed in the country of residence of the airline which for
Ryanair is Ireland. Profits from domestic flights which are flights within one country are taxable in that jurisdiction. In
addition to corporate taxes, Ryanair is subject to Value Added Tax (“VAT”), passenger taxes (which are levies on
passengers collected by Ryanair and paid to the relevant taxing authority) and taxes on employment. Due to the interplay
between tax laws in individual jurisdictions and the nature of the industry whereby operations can begin and end in different
jurisdictions, there is significant complexity in determining the appropriate corporation tax liability, VAT and payroll tax
obligations.
Our response:
In this area our audit procedures included, among others:
 Obtaining and inspecting tax assessments and related tax correspondence with the authorities of the principal
jurisdictions in which Ryanair operates.
 Engaging KPMG tax specialists, as appropriate, in impacted jurisdictions to assist with our audit of Ryanair’s tax
obligations.
 Challenging the key assumptions impacting on the critical estimates and judgements made by Ryanair in
determining its tax liabilities.
 Assessing whether Ryanair’s disclosures set out the risks inherent in the accounting for taxation balances and
related contingencies.
4 Our application of materiality and an overview of the scope of our audit
The materiality for the consolidated financial statements as a whole was set at €67 million (2015: €49.0 million). This has
been calculated with reference to a benchmark of Group profit before taxation, normalised to exclude the gain on the
disposal of the Group’s investment in Aer Lingus as disclosed in Note 4. We consider this measure to be one of the
principal considerations for members of the Company in assessing the financial performance of the Group.
We report to the Audit Committee all corrected and uncorrected misstatements we identified through our audit with a value
in excess of €3.3 million (2015 €2.0 million), in addition to other audit misstatements below that threshold that we believe
warranted reporting on qualitative grounds.
Ryanair is headquartered, managed and controlled from Ireland, and all of the audit work covering the Group’s revenues,
profit for the year and its assets and liabilities is undertaken and performed by the audit team based in Dublin.
5 We have nothing to report on the disclosures of principal risks
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:
 the Director’s Report on pages 9 to 12, concerning the principal risks, their management, and, based on that, the
directors’ assessment and expectations of the group’s ability to continue in operation and meets its liabilities as they
fall due over the eight years to March 31, 2024; or
 the disclosures in Note 1 of the financial statements concerning the use of the going concern basis of accounting.