Visa 2013 Annual Report Download - page 121

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
The effective income tax rate in fiscal 2013 differs from the rates in fiscal 2012 and 2011 mainly
due to:
• the decrease in overall ongoing state tax rate beginning in fiscal 2012 as a result of changes
in California apportionment rules adopted in that year;
• a tax benefit recognized in fiscal 2013 as a result of new guidance issued by the state of
California regarding apportionment rules for years prior to fiscal 2012;
• certain foreign tax credit benefits related to prior years recognized in fiscal 2013; and
• the absence of the following in fiscal 2013:
• the fiscal 2012 reversal of previously recorded tax reserves associated with uncertainties
related to the deductibility of covered litigation expense;
• a fiscal 2012 one-time, non-cash benefit from the remeasurement of existing net deferred
tax liabilities due to the changes in California apportionment rules adopted in that year;
• the effect of applying the aforementioned fiscal 2012 tax benefits to a fiscal 2012 pre-tax
income that was reduced by the $4.1 billion covered litigation provision; and
• the nontaxable revaluation of the Visa Europe put option recorded in fiscal 2011.
Current income taxes receivable were $142 million and $179 million at September 30, 2013 and
2012, respectively. Non-current income taxes receivable of $253 million were included in other assets
at September 30, 2013. See Note 5—Prepaid Expenses and Other Assets. At September 30, 2013
and 2012, income taxes payable of $64 million and $58 million, respectively, were included in accrued
income taxes as part of accrued liabilities, and accrued income taxes of $453 million and $171 million,
respectively, were included in other long-term liabilities. See Note 8—Accrued and Other Liabilities.
Cumulative undistributed earnings of the Company’s international subsidiaries that are intended to
be reinvested indefinitely outside the United States amounted to $3.8 billion at September 30, 2013.
The amount of income taxes that would have resulted had such earnings been repatriated is not
practicably determinable.
The Company’s largest operating hub outside the United States is located in Singapore. It
operates under a tax incentive agreement which is effective through September 30, 2014, and may be
extended through September 30, 2023, if certain additional requirements are satisfied. The tax
incentive agreement is conditional upon certain employment and investment thresholds being met by
the Company. The tax incentive agreement decreased Singapore tax by $158 million, $130 million and
$111 million, and the benefit of the tax incentive agreement on diluted earnings per share was
$0.24, $0.19 and $0.16 in fiscal 2013, 2012 and 2011, respectively.
In accordance with Accounting Standards Codification 740, the Company is required to inventory,
evaluate and measure all uncertain tax positions taken or to be taken on tax returns, and to record
liabilities for the amount of such positions that may not be sustained, or may only partially be
sustained, upon examination by the relevant taxing authorities.
At September 30, 2013 and 2012, the Company’s total gross unrecognized tax benefits were
$1.0 billion and $679 million, respectively, exclusive of interest and penalties described below. Included
in the $1.0 billion and $679 million are $801 million and $537 million of unrecognized tax benefits,
respectively, that if recognized, would reduce the effective tax rate in a future period.
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