SAPPI LTD (SAP) 6-K

Company’s components of income before income taxes are as follows for the years ended 31 December:
2007 2006 2005
Finland 36,324 (6,419) (181,578)
Germany 30,465 (11,873) (63,581)
Switzerland 12,404 (4,982) (9,240)
79,193 (23,274) (254,399)
The following table summarises the Company’s presentation of its net deferred tax liabilities on the combined balance sheets as of 31 December:
2007 2006 2005
Deferred tax assets
Impairment of assets - 28,980 28,720
Deferred tax liabilities
Appropriations for tax depreciation 38,617 56,740 66,042
Other temporary differences 12,035 12,306 13,538
50,652 69,046 79,580
Netting against assets - (28,980) (28,720)
Deferred tax liabilities, net 50,652 40,066 50,860
A reconciliation of income tax expense (benefit) computed at the statutory rate applicable in Finland of 26% for years ended 31 December to the Company’s
reported income tax expense (benefit) is as follows:
2007 2006 2005
Income tax benefit computed at the Finland statutory rate 20,590 (6,051) (66,144)
Difference between Finnish and foreign rates 3,604 (2,196) (7,483)
Impairment losses on goodwill - - 21,580
Tax losses with no tax benefit (11,277) 5,527 24,228
Other adjustments (177) (349) 30
12,740 (3,069) (27,789)
Tax expense (benefit) in income statement 12,740 (3,069) (27,789)
Taxes recognised directly to equity, which were financed by the Parent, were EUR 4,171, EUR 7,725 and EUR 2,154 for the years ended 31 December 2007,
2006 and 2005, respectively.
During 2007, the German statutory tax rate for fiscal year 2008 and forward was changed from 38% to 30%.
The Company recognises deferred tax assets on deductible temporary differences to the extent that it is probable that taxable profit will be available against
which the deductible temporary difference can be utilised. Once a deferred tax asset has been recognised by the Company, the realisation of those assets is
assessed for realisability on a regular basis. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. In preparing its taxes on a separate return basis, The Company excludes from that
assessment any utilisation of those losses by M-real or other related party, if any.
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