Annual Report 2007

e held in March 2008. Dividends declared in cash or distributed
to Ecuadorian or foreign shareholders are not subject to any additional
withholding.
Income Tax, Employee Profit-Sharing Deferred and INNFA Income
Deferred – The financial statements reflect the impact of prepaid
taxes and employee profit-sharing on taxable income or deductions
included in the balance sheet as temporary differences. These
temporary differences are generated by comparing the financial
statements prepared in accordance with the requirements of the
Ecuadorian Superintendency of Banks and Insurance with financial
statements prepared in accordance with International Financial
Reporting Standards. Further differences result from reconciliation
items determined following application of tax resolutions. Net tax
rates used to calculate the income tax, employee profit-sharing and
the INNFA provision for the year ended December 31, 2007 were
25%, 15% and 2% respectively, the combined nominal tax rate for
income tax, employee profit-sharing and INNFA income is 37.52%.
Details of the deferred tax are as follows:
(in thousands of U.S. dollars)
Deferred tax assets
Dec 31, 2007 Dec 31, 2006
Employee profit-sharing 199 539
INNFA 23 61
Income tax 1,459 1,671
Total 1,681 2,271
Deferred tax liabilities
Employee profit-sharing (213) (428)
INNFA (24) (50)
Income tax (971) (1,287)
Total (1,208) (1,765)
The effects of the deferred taxes resulting from the existence of
temporary differences for the years ended December 31, 2007 and
2006 are as follows.
Deferred tax assets
Employee profit-sharing INNFA Income tax
(in thousands of U.S. dollars) 2007 2006 2007 2006 2007 2006
Commission on loan portfolio (1) 97 516 11 59 1,236 1,559
Provision for retirement and severance 49 – 6 – 68 –
Provision for unused vacations 40 – 5 – 56 –
Other adjustments 13 23 1 2 99 112
Total deferred tax assets 199 539 23 61 1,459 1,671
Deferred tax liabilities
Employee profit-sharing INNFA Income tax
(in thousands of U.S. dollars) 2007 2006 2007 2006 2007 2006
Provision for loan portfolio (2) (187) (407) (21) (47) (927) (1,242)
Other adjustments (26) (21) (3) (3) (44) (45)
Total deferred tax liabilities (213) (428) (24) (50) (971) (1,287)
(1) Corresponds to the difference generated by the recognition of
loan commissions. In accordance with regulations of the Ecuadorian
Superintendency of Banks and Insurance, such income
is recorded at the time of granting the loan. However, in
accordance with International Financial Reporting Standards,
commissions are recorded based on the loan period.
(2) Corresponds to the difference in rules for the provisions
for the loan portfolio. In accordance with the Ecuadorian Superintendency
of Banks, such is recorded based on established
parameters. However, in accordance with International Finan-
F i n a n c i a l S tat e m e n t s
cial Reporting Standards, the provision for loans is based on the
probability of default taking into account real guarantees.