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Notes to Consolidated Financial Statements
12. INCOME TAXES
The Company and its domestic consolidated subsidiaries are subject to several taxes based on income which, in the aggregate,
result in statutory tax rates of approximately 40.6% for the years ended March 31, 2012 and 2011.
The following table summarizes the significant differences between the statutory tax rate and the effective tax rate for financial
statement purposes for the years ended March 31, 2012 and 2011:
2012 2011
Statutory tax rate............................................................................................................................. 40.6% 40.6%
Equity in net income......................................................................................................................... (8.3) (8.5)
Expenses not deductible for tax purposes........................................................................................ 0.4 0.3
Dividend income from overseas consolidated subsidiaries................................................................ 0.9 1.4
Tax credits........................................................................................................................................ (1.7) (2.4)
Effect of lower tax rates for overseas consolidated subsidiaries........................................................ (7.4) (10.2)
Valuation allowance.......................................................................................................................... (1.0) 3.0
Intercompany profits........................................................................................................................ 0.1 0.4
Undistributed earnings of consolidated subsidiaries and affiliates..................................................... 1.2 0.2
Amortization of goodwill................................................................................................................... 0.6 0.4
Provision for surcharge..................................................................................................................... 0.9 —
Adjustment of deferred tax assets and liabilities due to change in corporate tax rate........................ 1.8 —
Other............................................................................................................................................... 2.3 2.2
Effective tax rate........................................................................................................................... 30.4% 27.4%
Adjustment of deferred tax assets and liabilities for enacted changes in tax laws and rates
On December 2, 2011, amendments to the Japanese tax regulations; the “Act for Partial Revision of the Income Tax Act etc.
for the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures” (Act No.114 of 2011)
and the “Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction
Following the Great East Japan Earthquake” (Act No.117 of 2011) were enacted into law. For the years beginning on or after
April 1, 2012, corporate tax rate will be reduced and special corporate tax for reconstruction will be imposed.
In line with these changes, the tax rates of these amendments were applied to the statutory effective tax rate to compute
deferred tax assets and liabilities in fiscal 2012. The effect of this change in statutory effective tax rate was to decrease net
deferred tax liabilities by ¥3,439 million (US$41,842 thousand), and to increase deferred income taxes by ¥1,827 million
(US$22,229 thousand) and net unrealized holding gains on available-for-sale securities by ¥5,266 million (US$64,071 thousand)
at March 31, 2012.
Deferred tax assets and liabilities included in the consolidated balance sheets at March 31, 2012 and 2011 are as follows:
Thousands of
Millions of yen
U.S. dollars
2012 2011 2012
Deferred income taxes (current assets)....................................................... ¥30,683 ¥ 32,979 $373,318
Deferred income taxes (investments and other assets)............................... 16,935 17,745 206,047
Other current liabilities................................................................................ (223) (653) (2,713)
Deferred income taxes (non-current liabilities)............................................. (49,930) (64,369) (607,495)
¥ (2,535) ¥(14,298) $ (30,843)
Annual Report 2012
SUMITOMO ELECTRIC
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