Carrefour - 2017 Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements 2017 REGISTRATION DOCUMENT | CARREFOUR 5. 252 Income tax Note 8 Accounting principles Income tax expense comprises current taxes and deferred taxes. It includes the Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) local business tax in France assessed on the value-added generated by the business, which is reported under income tax expense because the Group considers that it meets the definition of a tax on income contained in IAS 12 – Income Tax. settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are not discounted and are classified in the statement of financial position under “Non-current assets” and “Non-current liabilities”. Deferred taxes are calculated on all temporary differences between the carrying amount of assets and liabilities in the consolidated statement of financial position and their tax basis (except in the specific cases referred to in IAS 12), and carried-forward tax losses. They are measured at the tax rates that are expected to apply to the period when the asset will be realised or the liability will be The recoverability of deferred tax assets is assessed separately for each tax entity, based on estimates of future taxable profits contained in the business plan for the country concerned (prepared as described in Note 6.3) and the amount of deferred tax liabilities at the period-end. A valuation allowance is recorded to write down deferred tax assets whose recovery is not considered probable. Income tax expense for the period 8.1 (in millions of euros) 2017 2016 Current income tax expense (including provisions) (496) (590) Deferred income taxes (122) 95 TOTAL INCOME TAX EXPENSE (618) (494) Tax proof Theoretical income tax for 2017 and 2016 has been calculated by multiplying consolidated income before tax by the standard French corporate income tax rate. For 2017, theoretical income tax expense amounted to 88 million euros compared with actual net income tax expense of 618 million euros. (in millions of euros) 2017 2016 Income before taxes 255 1,428 Standard French corporate income tax rate 34.4% 34.4% Theoretical income tax expense (88) (492) Adjustments to arrive at effective income tax rate: Differences between the standard French corporate income tax rate and overseas ● nominal taxation rates (40) 19 Effect of changes in applicable tax rates ● (46) 31 Tax expense and tax credits not based on the taxable income (1) ● (77) (28) Tax effect of other permanent differences ● (135) (40) Deferred tax assets recognised on temporary differences and tax loss carryforwards of ● previous years (2) 139 150 Deferred tax assets not recognised on temporary differences and tax loss carryforwards ● arising in the year (3) (98) (81) Valuation allowances on deferred tax assets recognised in prior years (3) ● (270) (69) Tax effect of net income from equity-accounted companies ● (1) (12) Other differences ● 1 29 TOTAL INCOME TAX EXPENSE (618) (494) Effective tax rate 242.0% 34.6% The reported amount of taxes with no tax base takes into account the CVAE local business tax in France, amounting to 62 million euros in 2017 (1) (2016: 69 million euros), withholding taxes and changes in provisions for tax risks (Note 9.2.1). As in 2016, deferred tax assets recognised in 2017 on prior years’ tax losses primarily concerned Brazil. (2) Valuation allowances recorded on deferred tax assets mainly concerned China and Argentina. (3)