Siemens 2006 Annual Report Download - page 179

Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts) 175
As of September 30, 2006, the Company had €6,455 of gross tax loss carryforwards. Of the
total, €5,694 tax loss carryforwards have unlimited carryforward periods and €761 expire
over the periods to 2023. An amount of €202 in valuation allowances for deferred tax assets
would be allocated to reduce goodwill or other intangible assets of acquired entities should
the related tax benefits be subsequently recognized.
In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion of the deferred tax asset will not be realized. The ulti-
mate realization of deferred tax assets is dependent upon the generation of future taxable
profits during the periods in which those temporary differences and tax loss carryforwards
become deductible. Management considers the scheduled reversal of deferred tax liabilities
and projected future taxable income in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the periods which
the deferred tax assets are deductible, management believes it is more likely than not the
Company will realize the benefits of these deductible differences, after giving effect to related
valuation allowances.
The Company provides for income taxes or foreign withholding taxes on the cumulative
earnings of foreign subsidiaries when it is determined that such earnings either will be sub-
ject to taxes or are intended to be repatriated. In fiscal year 2006, income taxes on cumulative
earnings of €8,307 of foreign subsidiaries have not been provided for because such earnings
will either not be subject to any such taxes or are intended to be indefinitely reinvested in
those operations. It is not practicable to estimate the amount of the unrecognized deferred
tax liabilities for these undistributed foreign earnings.
The Company’s income tax returns are routinely examined by domestic and foreign tax
authorities. We believe that the Company’s accruals for tax liabilities are adequate for all open
years, based on the assessment of many factors including past experience and interpretations
of tax law applied to the facts of each matter.
Including the items charged or credited directly to related components of AOCI and the
benefit from discontinued operations, the provision (benefit) for income taxes consists of the
following:
Notes to Consolidated Financial Statements
Year ended
September 30,
2006 2005
Provision for income taxes 1,078 979
Discontinued operations (38) (498)
Shareholders’ equity for other comprehensive income 405 (763)
1,445 (282)