Notes to consolidated financial statements
For the years ended December 31, 2011 and 2010 (as adjusted)
(In thousands of Mexican pesos ($) and thousands of U.S. dollars (US$))
17. Income taxes
The Company is subject to ISR and IETU.
The ISR rate is 30% for 2011 and 2010; it will be 30% for 2012, 29% for 2013, and 28% for 2014. The Company pays ISR, together with its subsidiaries on a consolidated basis.
On December 7, 2009, amendments to the ISR Law were published, to become effective beginning in 2010. These amendments state that: a) ISR relating to tax consolidation benefits obtained from 1999 through 2004 should be paid in installments beginning in 2010 through 2015, and b) ISR relating to tax benefits obtained in the 2005 tax consolidation and thereafter, should be paid during the sixth through the tenth year after that in which the benefit was obtained.
IETU - Revenues, as well as deductions and certain tax credits, are determined based on cash flows of each fiscal year. Beginning in 2010 the IETU rate is 17.5% and it was17%, in 2009. The Asset Tax (IMPAC) Law was repealed upon enactment of the IETU Law; however, under certain circumstances, IMPAC paid in the ten years prior to the year in which ISR is paid for the first time, may be recovered, according to the terms of the law. In addition, as opposed to ISR, the parent and its subsidiaries will incur IETU on an individual basis.
Income tax incurred will be the higher between ISR and IETU.
Based on financial projections, in accordance with INIF 8, Effects of IETU, the Company and most of its subsidiaries, determined that they will essentially pay ISR, and therefore only recognize deferred ISR.
a. ISR consists of the following:
| |
|
2011 |
|
2010 (as adjusted) |
| ISR: |
|
|
|
|
| Current |
$ |
2,227,081 |
$ |
2,580,468 |
| Deferred |
|
(361,783) |
|
(605,326) |
| |
|
|
|
|
| |
|
|
|
|
| IETU: |
|
|
|
|
| Current |
|
6,605 |
|
- |
| |
$ |
1,871,903 |
$ |
1,975,142 |
b. Following is a reconciliation of the statutory and effective ISR rates expressed as a percentage of income before taxes on income:
| |
2011
% |
2010 (as adjusted)
% |
| Statutory rate |
30 |
30 |
| Add (deduct) the effect of permanent differences: |
|
|
| Nondeductible expenses |
1 |
1 |
| Inflation effects |
(1) |
1 |
| Profit sharing of associated companies |
(3) |
(4) |
| Effective rate |
27 |
28 |
c. Other comprehensive income amounts and items and the deferred taxes affected during the period are as follows:
| |
|
Amount before income taxes |
|
Income taxes |
|
Amount net of income taxes |
| Unrealized gain on cash flow hedge |
$ |
148,354 |
$ |
44,506 |
$ |
103,848
|
| Foreign operations translation effect |
|
76,719 |
|
23,016 |
|
53,703 |
| |
$ |
225,073 |
$ |
67,522 |
$ |
157,551 |
d. The main items comprising the liability balance of deferred ISR are:
| |
|
2011 |
|
2010 (as adjusted) |
| ISR deferred (asset) liability |
|
|
|
|
| Property, machinery and equipment |
$ |
1,628,283 |
$ |
1,571,669 |
| Inventories |
|
23,721 |
|
512,418 |
| Accounts receivable from installment sales |
|
336,004 |
|
389,160 |
| Advances from customers |
|
(138,806) |
|
(328,186) |
| Natural gas and metals swaps and futures |
|
(41,800) |
|
(89,310) |
| Revenues and costs by percentage-of-completion method |
|
(122,105) |
|
(16,626) |
| Supplemental estimates for assets and reserves for liabilities |
|
(665,154) |
|
(637,639) |
| Other, net |
|
322,147 |
|
297,334 |
| Deferred ISR on temporary differences |
|
1,342,290 |
|
1,698,820 |
| Effect of tax loss carry-forwards |
|
309,896 |
|
163,554 |
| Difference income tax payable for CUFIN |
|
195,123 |
|
195,123 |
| Share losses |
|
(28,929) |
|
(39,865) |
| Deferred ISR payment (long-term CUFINRE) |
|
19,365 |
|
(1,199) |
| Total liability of deferred income taxes |
$ |
1,837,745 |
$ |
2,016,433 |
e. Unapplied tax loss carryforwards and recoverable IMPAC of Grupo Carso, S.A.B. de C.V. and its subsidiaries for which a deferred income tax asset and an advanced income tax payment, respectively, have been recognized, may be recovered provided certain requirements are fulfilled. Their maturities and restated amounts at December 31, 2011 are as follows:
| Year of expiration |
|
Tax loss carryforwards |
| 2016 |
$ |
302 |
| 2017 |
|
7,761 |
| 2018 |
|
121,963 |
| 2019 |
|
17,396 |
| 2020 and thereafter |
|
1,193,429 |
| |
$ |
1,340,851 |