GE 2014 Annual Report Download - page 85

GE 2014 FORM 10-K 65
MD&A OTHER CONSOLIDATED INFORMATION
indefinitely reinvested outside the U.S. and are not subject to current U.S. income tax. The rate of tax on our indefinitely
reinvested non-U.S. earnings is below the 35% U.S. statutory rate because we have significant business operations subject to
tax in countries where the tax on that income is lower than the U.S. statutory rate and because GE funds the majority of its
non-U.S. operations through foreign companies that are subject to low foreign taxes.
The most significant portion of these benefits depends on the provision of U.S. law deferring the tax on active financial
services income, which, as discussed below, is subject to expiration. A substantial portion of the remaining benefit related to
business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate is derived
from our GECAS aircraft leasing operations located in Ireland. No other operation in any one country accounts for a material
portion of the remaining balance of the benefit.
We expect our ability to benefit from non-U.S. income taxed at less than the U.S. rate to continue, subject to changes in U.S.
or foreign law, including the expiration of the U.S. tax law provision deferring tax on active financial services income, as
discussed in Note 14 to the consolidated financial statements in this Form 10-K Report. In addition, since this benefit depends
on management’s intention to indefinitely reinvest amounts outside the U.S., our tax provision will increase to the extent we no
longer indefinitely reinvest foreign earnings.
BENEFITS FROM LOWER-TAXED GLOBAL OPERATIONS
(In billions) 2014 2013 2012
Benefit of lower foreign tax rate on indefinitely reinvested non-U.S. earnings $ 2.3 $ 2.5 $ 1.3
Benefit of audit resolutions 0.1 0.4 0.1
Other 0.8 1.1 0.8
Total $ 3.2 $ 4.0 $ 2.2
2014 – 2013 COMMENTARY
Our benefits from lower-taxed global operations decreased in 2014 principally because of the absence of the 2013 benefits,
previously discussed, on the sale of a portion of Cembra, lower benefits from the realization of prior-year losses and from the
resolution of Internal Revenue Service (IRS) audits, partially offset by larger benefits from other indefinitely reinvested
earnings including from the 2014 disposition of GEMB-Nordic.
2013 – 2012 COMMENTARY
Our benefits from lower-taxed global operations increased in 2013 principally because of the realization of benefits related to
the sale of a portion of Cembra, the realization of benefits for prior-year losses, and the resolution of IRS audits.
OTHER INFORMATION
To the extent global interest rates and non-U.S. operating income increase, we would expect tax benefits to increase, subject
to management’s intention to indefinitely reinvest those earnings. Included in 2014 is the benefit from the indefinite
reinvestment of the eligible earnings from the sale of GEMB-Nordic. Included in 2013 is the benefit from the indefinite
reinvestment of the eligible earnings from the sale of a portion of Cembra.
The tax benefit from non-U.S. income taxed at a local country rather than the U.S. statutory tax rate is reported in the caption
“Tax on global activities including exports” in the effective tax rate reconciliation in Note 14 to the consolidated financial
statements in this Form 10-K Report.
A more detailed analysis of differences between the U.S. federal statutory rate and the consolidated effective rate, as well as
other information about our income tax provisions, is provided in the “Critical Accounting Estimates” section within the MD&A
and Note 14 to the consolidated financial statements in this Form 10-K Report. The nature of business activities and