Unilever 2014 Annual Report Download - page 63

6 TAXATION
6A INOME TAX
Income tax on the proft for the year comprses current and deferred tax Income tax s recognsed n the ncome statement except
to the extent that t relates to tems recognsed drectly n equty
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustments to tax payable in respect of previous years.
Current tax in the consolidated income statement will differ from the income tax paid in the consolidated cash flow statement
primarily because of deferred tax arising on temporary differences and payment dates for income tax occurring after the balance
sheet date.
Tax charge n ncome statement
 mllon
2014
€ million
2013
€ million
2012
urrent tax
Current year (2,111) (2,320) (1,859)
Over/(under) provided in prior years 68 232 (135)
(2,043) (2,088) (1,994)
Deferred tax
Origination and reversal of temporary differences (112) 177 164
Changes in tax rates 4 781
Recognition of previously unrecognised losses brought forward 20 53 52
(88) 237 297
(2,131) (1,851) (1,697)
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:
Reconclaton of effectve tax rate
%
2014
%
2013
%
2012
Computed rate of tax(a) 27 28 26
Differences due to:
Incentive tax credits (5) (4) (5)
Withholding tax on dividends 2 2 2
Adjustments to previous years – (4) –
Expenses not deductible for tax purposes 1 2 2
Other 3 2 1
Effective tax rate 28 26 26
(a) 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 it is probable that they will 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.
100 Unilever Annual Report and Accounts 2014Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNILEVER GROUP CONTINUED