19. Income taxes

The components of income tax expense for the years ended 31 December 2014 and 2013 were as follows:

  2014 2013
Current income tax expense    
Income tax for the year (5,396) (3,752)
Adjustments of the current income tax for previous years 31 101
Total current income tax for the year (5,365) (3,651)
Deferred tax expense    
Origination and reversal of temporary differences (3,062) (5,988)
Changes in unused tax losses (1,520) 1,651
Total deferred income tax (4,582) (4,337)
Total income tax expense for the year (9,947) (7,988)

A reconciliation of the theoretical tax charge to the actual income tax charge is as follows:

  2014 2013
Profit before tax 47,754 32,119
Statutory income tax rate 20% 20%
Theoretical tax charge at statutory income tax rate (9,551) (6,424)
Adjustments of the current income tax for previous years 31 101
Non-deductible expenses and non-taxable income 916 (2,299)
Tax on intragroup dividend income (123) (379)
Changes in unrecognized deferred tax assets (1,087) 1,013
Effect of  tax rate change (133) -
Total actual income tax (9,947) (7,988)
Effective tax rate, % 20,83% 24,87%

Effect of tax rate change include calculation of deferred tax assets and liabilities from associate as at December 31, 2014.

Non-deductible expenses and non-taxable income comprised the following amounts for the year ended 31 December 2014 and 2013:

  2014 2013
Effect of other employee benefits 288 223
Effect of business combination achieved in several stages (128) -
Reversal/ (accrual) of impairment loss 260 72
Other 496 (2,594)
Total non-deductible expenses and non-taxable income 916 (2,299)

Other non-deductible expenses and non-taxable income include income connected with depreciation of certain property, plant and equipment, promotional and sponsorship expenditures, travel expenditures in excess of certain statutory allowances, other expenses and value added tax accrued on free-of-charge services.

The components of net deferred tax assets and liabilities as at 31 December 2014 and 2013, and the respective movements during 2014 and 2013 were as follows:

Movement during 2014 recognized in
  Balance as at 1 January 2014 Disposal through business combinations Equity Other comprehensive income Profit / or loss for the yearReclassification to assets held for sale of mobileBalance as at 31 December 2014
Tax effects of future tax deductible items              
Property, plant and equipment 9 (35) 1 - 137 25 137
Intangible assets 74 - - - (65) - 9
Unused tax losses 1,614 (58) - - (1,520) (19) 17
Trade and other accounts receivable 39 (4) - - 56 (31) 60
Inventories 807 - - - (518) - 289
Investments 429 - - - 138 - 567
Employee benefits 1,945 - - (758) (11) - 1,176
Accounts payable, provisions and accrued expenses 4,451 (2) - - (325) (124) 4,000
Other 474 (9) 3 - (12) (1) 455
Gross deferred tax asset 9,842 (108) 4 (758) (2,120) (150) 6,710
               
Tax effects of future taxable items:              
Property, plant and equipment (30,186) 5 - - (18) 1,128 (29,071)
Intangible assets (3,086) 45 - - (52) 11 (3,082)
Investments (635) 9 - - (3,135) - (3,761)
Accounts payable, provisions and accrued expenses (18) - - - (5) - (23)
Trade and other accounts receivable (1,907) - - - 734 4 (1,169)
Inventories - - - - (7)   (7)
Loans and borrowings (274) - - - 16 - (258)
Other (188) - (4) - 6 - (186)
Gross deferred tax liability (36,294) 59 (4) - (2,461) 1,143 (37,557)
Net deferred tax liability     (26,452) (49) - (758) (4,581) 993 (30,847)
Movement during 2013 recognized in
  Balance as at 1 January 2013 Acquisition through business combinations Equity Other comprehensive income Profit / or loss for the yearReclassification to assets held for sale of mobileBalance as at 31 December 2013
               
Tax effects of future tax deductible items              
Property, plant and equipment 464 - - - (5) (450) 9
Intangible assets - - - - 74 - 74
Unused tax losses 3,087 - - - 1,651 (3,124) 1,614
Trade and other accounts receivable 169 - - - (124) (6) 39
Inventories 227 - - - 624 (44) 807
Investments 1,481 - - - (1,051) (1) 429
Employee benefits 1,708 - - (371) 608 - 1,945
Loans and  borrowings 5 - - - - (5) -
Other non-current liabilities 110 - - - (110) - -
Accounts payable, provisions and accrued expenses 2,817 - - - 1,787 (153) 4,451
Other 639 - 1 - 130 (296) 474
Gross deferred tax asset 10,707 - 1 (371) 3,584 (4,079) 9,842
               
Tax effects of future taxable items:              
Property, plant and equipment (22,888) - (1) - (8,151) 854 (30,186)
Intangible assets (5,158) - - - 265 1,807 (3,086)
Investments (855) - - - 220 - (635)
Accounts payable, provisions and accrued expenses (152) - - - 106 28 (18)
Trade and other accounts receivable (1,544) - - - (387) 24 (1,907)
Loans and borrowings (222) - - - (54) 2 (274)
Other (273) - (2) - 80 7 (188)
Gross deferred tax liability (31,092) - (3) - (7,921) 2,722 (36,294)
Net deferred tax liability     (20,385) - (2) (371) (4,337) (1,357) (26,452)

In 2013 the Group recalculated income tax for prior periods related to the deductibility for tax purposes of accelerated tax depreciation of property, plant and equipment operated in an aggressive environment. As a result adjusted tax declarations were submitted to the tax authorities and income tax overprovided in prior periods was recognised. Accordingly the tax value of property, plant and equipment was decreased, which resulted in an increase of deferred tax liabilities.

Taxable temporary differences associated with investments in subsidiaries for which no deferred tax liabilities were recognized in the accompanying consolidated statements of financial position as at 31 December 2014 and 2013 amounted to 5,298 and 4,902 respectively. Deductible temporary differences associated with investments in subsidiaries for which no deferred tax assets were recognized in the accompanying consolidated statements of financial position as at 31 December 2014 and 2013 amounted to 6,205 and 2,759 respectively.

Deductible temporary differences for which no deferred tax assets were recognized in the accompanying consolidated statements of financial position as at 31 December 2014 and 2013 amounted to 1,133 and 1,836, respectively, of which unused tax losses with expiry date from 2014 to 2022 amounted to 156 and 157 for 2014 and 2013, respectively.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred income tax assets and deferred income tax liabilities relate to the income taxes levied by the same fiscal authority on the same taxable entity.

The consolidated statement of comprehensive income for 2014 and 2013 includes tax expense in respect of following items of other comprehensive income:

2014 2013
Actuarial gains and losses (758) (371)

My Annual Report

Your page has been added successfully.