10. Income taxes
The Group is generally subject to corporate income taxes based on the taxable net income in various jurisdictions in which the Group operates. The components of the income tax charge were:
| CHF millions |
2002
|
2003
|
|
|
||
| Current taxes |
162
|
548
|
| Deferred taxes |
-35
|
86
|
|
|
||
| Income tax expense |
127
|
634
|
|
|
||
The components of deferred income taxes were as follows:
| CHF millions |
2002
|
2003
|
|
|
||
Deferred tax assets |
||
| Technical provisions |
1267
|
918
|
| Unrealised losses on investments |
698
|
428
|
| Benefit on loss carryforwards |
1725
|
2163
|
| Other |
1872
|
992
|
|
|
||
| Gross deferred tax assets |
5562
|
4501
|
| Valuation allowance |
-434
|
-1052
|
|
|
||
| Total |
5128
|
3449
|
|
|
||
Deferred tax liabilities |
||
| Present value of future profits |
2115
|
1985
|
| Deferred acquisition costs |
415
|
465
|
| Technical provisions |
1559
|
554
|
| Unrealised gains on investments |
527
|
459
|
| Other |
1935
|
1551
|
|
|
||
| Total |
6551
|
5014
|
|
|
||
|
|
||
| Deferred income taxes |
1423
|
1565
|
|
|
||
As of 31 December 2003, the Group had CHF 2 215 million of domestic and CHF 4 941 million foreign net operating tax loss carryforwards, expiring as follows: CHF 325 million in 2007, CHF 398 million in 2008 and CHF 6 433 million after 2008. The Group also had capital loss carryforwards of CHF 459 million, expiring as follows: CHF 2 million in 2004, CHF 2 million in 2005, CHF 2 million in 2006 and CHF 453 million after 2008.
Income taxes paid in 2002 and 2003 were CHF 23 million and CHF 309 million, respectively.
The Group has revised the treatment of the foreign currency impacts in deferred taxes and certain of the allocations between the components in 2003. The 2002 deferred tax assets, on a comparable basis, were CHF 5 065 million and the deferred tax liabilities were CHF 6 145 million. The main component impacted is the deferred tax liability on technical provisions, which was CHF 1 000 million on a comparable basis. The revision to foreign currency impacts the foreign currency translation adjustment in shareholders’ equity.
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