Philips 2012 Annual Report Download - page 143

12 Group financial statements 12.11 - 12.11
Annual Report 2012 143
Deferred tax assets and liabilities relate to the balance sheet captions,
as follows:
assets liabilities net
2012
Intangible assets 151 (1,079) (928)
Property, plant and equipment 115 (47) 68
Inventories 263 (5) 258
Prepaid pension costs 2 (2) −
Other receivables 58 (3) 55
Other assets 54 (12) 42
Provisions:
- pensions 599 (2) 597
- guarantees 26 − 26
- termination benefits 117 1 118
- other postretirement 72 − 72
- other 624 (19) 605
Other liabilities 198 (27) 171
Tax loss carryforwards (including tax
credit carryforwards) 741 − 741
3,020 (1,195) 1,825
Set-off of deferred tax positions (1,103) 1,103 −
Net deferred tax assets 1,917 (92) 1,825
assets liabilities net
2011
Intangible assets 55 (1,129) (1,074)
Property, plant and equipment 147 (70) 77
Inventories 231 (10) 221
Prepaid pension costs 6 (4) 2
Other receivables 56 (12) 44
Other assets 50 (31) 19
Provisions: −
- pensions 619 (2) 617
- guarantees 34 − 34
- termination benefits 59 (17) 42
- other postretirement 70 1 71
- other 654 (18) 636
Other liabilities 267 (36) 231
Tax loss carryforwards (including tax
credit carryforwards) 732 − 732
2,980 (1,328) 1,652
Set-off of deferred tax positions (1,251) 1,251 −
Net deferred tax assets 1,729 (77) 1,652
Deferred tax assets are recognized for temporary differences, unused
tax losses, and unused tax credits to the extent that realization of the
related tax benefits is probable. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income in
the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment.
The net deferred tax assets of EUR 1,825 million (2011: EUR 1,652
million) consist of deferred tax assets of EUR 1,917 million (2011: EUR
1,729 million) in countries with a net deferred tax asset position and
deferred tax liabilities of EUR 92 million (2011: EUR 77 million) in
countries with a net deferred tax liability position. Of the total deferred
tax assets of EUR 1,917 million at December 31, 2012, (2011: EUR
1,729 million), EUR 507 million (2011: EUR 487 million) is recognized
in respect of fiscal entities in various countries where there have been
fiscal losses in the current or preceding period. Management’s
projections support the assumption that it is probable that the results
of future operations will generate sufficient taxable income to utilize
these deferred tax assets.
At December 31, 2012 and 2011, there were no recognized deferred
tax liabilities for taxes that would be payable on the unremitted earnings
of certain foreign subsidiaries of Philips Holding USA (PHUSA) since it
has been determined that undistributed profits of such subsidiaries will
not be distributed in the foreseeable future. The temporary differences
associated with the investments in subsidiaries of PHUSA, for which a
deferred tax liability has not been recognized, aggregate to EUR 35
million (2011: EUR 36 million).
At December 31, 2012, operating loss carryforwards expire as follows:
Total 2013 2014 2015 2016 2017
2017/
2021 later
unlimi-
ted
4,812 32 39 9 18 11 29 989 3,685
The Company also has tax credit carryforwards of EUR 110 million,
which are available to offset future tax, if any, and which expire as
follows:
Total 2013 2014 2015 2016 2017
2017/
2021 later
unlimi-
ted
110 − − − − 4 19 72 15
At December 31, 2012 , operating loss and tax credit carryforwards
for which no deferred tax assets have been recognized in the balance
sheet, expire as follows:
Total 2013 2014 2015 2016 2017
2017/
2021 later
unlimi-
ted
2,007 13 15 2 2 1 11 11 1,952
At December 31, 2012, the amount of deductible temporary
differences for which no deferred tax asset has been recognized in the
balance sheet is EUR 157 million (2011: EUR 164 million).
Classification of the income tax payable and receivable is as follows:
2011 2012
Income tax receivable 162 97
Income tax receivable - under non-current receivables 1 −
Income tax payable (191) (200)
Income tax payable - under non-current liabilities (1) −
Tax risks
Philips is exposed to tax uncertainties. These uncertainties included
amongst others the following:
Transfer pricing uncertainties
Philips has issued transfer pricing directives, which are in accordance
with international guidelines such as those of the Organization of
Economic Co-operation and Development. As transfer pricing has a
cross-border effect, the focus of local tax authorities on implemented
transfer pricing procedures in a country may have an impact on results
in another country. In order to reduce the transfer pricing
uncertainties, monitoring procedures are carried out by Group Tax and
Internal Audit to safeguard the correct implementation of the transfer
pricing directives.
Tax uncertainties on general service agreements and
specific allocation contracts
Due to the centralization of certain activities in a limited number of
countries (such as research and development, centralized IT, corporate
functions and head office), costs are also centralized. As a consequence,
these costs and/or revenues must be allocated to the beneficiaries, i.e.