2007 Annual Report - Sappi

US$ million 2007 2006
12. Deferred taxation continued
Reconciliation of deferred taxation
Deferred taxation balances at beginning of year
Deferred taxation assets 74 70
Deferred taxation liabilities (336) (367)
(262) (297)
Deferred taxation (charge) release for the year (refer note 6) (28) 5
Other liabilities, accruals and prepayments (37) (24)
Inventory (4) 8
USA alternative minimum taxation credit carry forward – (1)
Utilisation of Secondary Tax on Companies (STC) credits (8) (9)
Taxation loss carry forward 29 49
Property, plant and equipment 15 7
Plantations (13) (1)
Other non-current assets 2 5
Other non-current liabilities (12) (29)
Amounts recorded directly against equity* (18) (13)
Rate adjustments 19 1
Translation differences (36) 42
Deferred taxation balances at end of year (325) (262)
Deferred taxation assets 60 74
Deferred taxation liabilities (385) (336)
* Includes utilisation of previously unrecognised deferred taxation assets of US$34 million (2006: US$5 million).
Secondary Tax on Companies (STC)
STC is levied on South African companies at a rate of 10% with effect from
01 October 2007 (previously 12.5%) on dividends distributed.
Current and deferred taxation are measured at the tax rate applicable to
undistributed income and therefore only take STC into account to the extent that
dividends have been received or paid.
On declaration of a dividend, the company includes the STC on this dividend in its
computation of the income taxation expense in the period of such declaration.
Undistributed earnings that would be subject to STC 868 595
Tax effect if distributed 79 66
Available STC credits at end of year 10 18
sappi limited | 07 | annual report 107