DRAVA, KUPA, RJE»INA, LOKVARKA, LI»ANKA LIKA, DOBRA ...

HEP ANNUAL REPORT 2010
92
CHAPTER 6 - FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE HEP GROUP (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2010
9. INCOME TAX
2010 2009
HRK’000 HRK’000
Current taxes 440,880 126,470
Deferred tax expense/(income) relating to the origination and reversal of
temporary differences
(39,078) (53,783)
Income tax expense 401,802 72,687
Adjustments to deferred tax assets were as follows:
2010 2009
HRK’000 HRK’000
Balance at 1 January 120,351 66,568
Reversal of deferred tax assets (21,345) (1,285)
Deferred tax assets recognised 60,423 55,068
Balance at 31 December 159,429 120,351
Deferred tax assets have arisen on provisions for jubilee awards and regular retirement benefits not recognised for
tax purposes, provisions for trade debtors – households and provisions for legal actions.
The reconciliation between income tax and profit reported in the income statement is set out below:
2010 2009
HRK’000 HRK’000
Profit before taxation 1,837,168 227,109
Income tax at the applicable rate of 20% 367,433 45,421
Tax non-allowable expense/(income) (157,509) (52,527)
Tax effect of permanent differences 39,078 53,783
Tax effect of losses brought forward - (90,089)
Tax effect of Group entities operating with loss 152,800 116,099
Tax expense for the year 401,802 72,687
The Group and its subsidiaries are subject to income tax separately, according to the tax laws and regulations of the
Republic of Croatia. Other subsidiaries in the Group reported total tax losses of HRK 626,588 thousand (2009: HRK
536,237 thousand), while the Group recorded a total income tax expense of HRK 440,880 thousand (2009: HRK
126,470 thousand) and reported deferred tax assets in the amount of HRK 39,078 thousand for the current year and
HRK 53,783 thousand for prior years.
Tax losses are available for carry forward and offsetting against the tax base in future taxation periods until
their expiration as prescribed by law, which is 5 years following the year in which the tax losses were incurred.