Toyota 2007 Annual Report Download - page 114

112 ANNUAL REPORT 2007
The provision for income taxes consists of the following:
U.S. dollars
Yen in millions in millions
For the year
ended
For the years ended March 31, March 31,
2005 2006 2007 2007
Current income tax expense:
Parent company and domestic subsidiaries .................................. ¥376,845 ¥451,593 ¥591,840 $5,013
Foreign subsidiaries ......................................................................... 196,354 310,298 174,164 1,475
Total current ................................................................................. 573,199 761,891 766,004 6,488
Deferred income tax expense (benefit):
Parent company and domestic subsidiaries .................................. 34,820 76,503 51,740 438
Foreign subsidiaries ......................................................................... 49,891 (43,241) 80,568 683
Total deferred............................................................................... 84,711 33,262 132,308 1,121
Total provision.............................................................................. ¥657,910 ¥795,153 ¥898,312 $7,609
Toyota is subject to a number of different income taxes
which, in the aggregate, indicate a statutory rate in Japan of
approximately 40.2% for the years ended March 31, 2005, 2006,
and 2007. Such rate was also used to calculate the tax effects of
temporary differences, which are expected to be realized in the
future years. Reconciliation of the differences between the
statutory tax rate and the effective income tax rate is as follows:
For the years ended March 31,
2005 2006 2007
Statutory tax rate ................................................................................................................... 40.2% 40.2% 40.2%
Increase (reduction) in taxes resulting from:
Non-deductible expenses ................................................................................................ 0.3 0.4 0.5
Increase in deferred tax liabilities on undistributed earnings of foreign
subsidiaries and affiliates accounted for by the equity method.................................. 1.8 2.8 3.1
Valuation allowance........................................................................................................... (0.1) (0.4) 0.1
Tax credits .......................................................................................................................... (3.4) (4.1) (3.9)
Other................................................................................................................................... (1.3) (0.8) (2.3)
Effective income tax rate.......................................................................................................37.5% 38.1% 37.7%
Significant components of deferred tax assets and liabilities are as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2006 2007 2007
Deferred tax assets
Accrued pension and severance costs............................................................................. ¥ 183,824 ¥ 104,470 $ 885
Warranty reserves and accrued expenses ....................................................................... 208,654 218,125 1,848
Other accrued employees’ compensation ...................................................................... 115,143 120,004 1,016
Operating loss carryforwards for tax purposes............................................................... 44,293 35,629 302
Inventory adjustments ....................................................................................................... 50,407 57,698 489
Property, plant and equipment and other assets ........................................................... 162,872 168,535 1,428
Other................................................................................................................................... 308,317 349,933 2,964
Gross deferred tax assets ............................................................................................. 1,073,510 1,054,394 8,932
Less—Valuation allowance................................................................................................ (93,629)(95,225) (807)
Total deferred tax assets............................................................................................... 979,881 959,169 8,125
Deferred tax liabilities
Unrealized gains on securities .......................................................................................... (451,282) (465,280) (3,941)
Undistributed earnings of foreign subsidiaries and affiliates
accounted for by the equity method ............................................................................. (502,232) (559,591) (4,740)
Basis difference of acquired assets .................................................................................. (36,135) (37,778) (320)
Lease transactions ............................................................................................................. (335,294) (419,259) (3,552)
Gain on securities contribution to employee retirement benefit trust ......................... (66,523) (66,523) (564)
Other................................................................................................................................... (61,321) (80,380) (681)
Gross deferred tax liabilities......................................................................................... (1,452,787) (1,628,811) (13,798)
Net deferred tax liability ............................................................................................... ¥ (472,906) ¥ (669,642) $ (5,673)