Unilever 2011 Annual Report Download - page 84

81
6A. Income tax continued
Tax charge in income statement
€ million
2011
€ million
2010
€ million
2009
Current tax
Current year (1,571) (1,479) (1,263)
Over/(under) provided in prior years(a) 93 88 151
(1,478) (1,391) (1,112)
Deferred tax
Origination and reversal of temporary differences (179) (237) (276)
Changes in tax rates 1 (2) 3
Recognition of previously unrecognised losses brought forward 34 96 128
(144) (143) (145)
(1,622) (1,534) (1,257)
(a) Provisions have been released following the favourable settlement of prior year tax audits in a number of countries, none of which is individually material.
The reconciliation between the computed weighted average rate of income tax expense, which is generally applicable to Unilever
companies, andthe actual rate of taxation charged is as follows:
Reconciliation of effective tax rate
%
2011
%
2010
%
2009
Computed rate of tax(b) 27 28 29
Differences due to:
Incentive tax credits (5) (5) (6)
Withholding tax on dividends 2 2 2
Adjustments to previous years (1) (3) (3)
Expenses not deductible for tax purposes 1 1 1
Other 2 3 3
Effective tax rate 26 26 26
(b) The computed tax rate used is the average of the standard rate of tax applicable in the countries in which Unilever operates, weighted by the amount of profit
before taxation generated in each of those countries. For this reason the rate may vary from year to year according to the mix of profit and related tax rates.
6B. Deferred tax
Deferred tax is recognised using the liability method on taxable temporary differences between the tax base and the accounting
base of items included in the balance sheet of the Group. Certain temporary differences are not provided for as follows:
• goodwill not deductible for tax purposes;
• the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and
• differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted, or substantively enacted, at the year end.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Movements in 2011 and 2010
€ million
As at
1 January
2011
€ million
Income
statement
€ million
Other(a)
€ million
As at
31 December
2011
€ million
As at
1 January
2010
€ million
Income
statement
€ million
Other(a)
€ million
As at
31 December
2010
Pensions and similar obligations 440 (113) 421 748 592 (133) (19) 440
Provisions 701 (45) 5 661 651 10 40 701
Goodwill and intangible assets (1,122) 78 (677) (1,721) (944) (53) (125) (1,122)
Accelerated tax depreciation (540) (60) (68) (668) (525) 12 (27) (540)
Tax losses 117 (21) 4 100 82 27 8 117
Fair value gains (25) (12) 17 (20) (24) – (1) (25)
Fair value losses 13 2 16 31 2 – 11 13
Share-based payments 120 (19) 17 118 146 (25) (1) 120
Other 23 46 (22) 47 (6) 19 10 23
(273) (144) (287) (704) (26) (143) (104) (273)
(a) Of the other movements in deferred tax of €287 million (2010: €104 million), €677 million (2010: €55 million) arose as a result of acquisitions and disposals.
Of this amount €623 million (2010: €58 million) was as a result of deferred tax arising on goodwill and intangibles assets. The remainder of other movements
relates to either deferred tax on the components of other comprehensive income of (€453) million (2010: €48 million), or currency retranslation €63 million
(2010: €1 million).
Unilever Annual Report and Accounts 2011
Financial statements