ANNUAL REPORT 2005 - Lukoil

FINANCIAL ACCOUNTS
Russian ruble bonds
In November 2004, the Company issued 6 million Russian ruble bonds with a nominal value of 1,000 Russian rubles each,
maturing on November 23, 2009. For a period of 7 days commencing on November 13, 2007 the bonds holders have the
right to demand the Company repurchase the bonds. The bonds have a half year coupon period and bear interest at
7.25% per annum.
Maturities of long-term debt
Annual maturities of total long-term debt during the next five years, including the portion classified as current, are
$537 million in 2006, $600 million in 2007, $2,414 million in 2008, $467 million in 2009, $346 million in 2010 and
$310 million thereafter.
NOTE 13. TAXES
The Group is taxable in a number of jurisdictions within and outside of the Russian Federation and, as a result, is subject
to a variety of taxes as established under the statutory provisions of each jurisdiction.
The total cost of taxation to the Group is reported in the consolidated statement of income as "Total income tax expense"
for income taxes, as "Excise and export tariffs" for excise taxes, export tariffs and petroleum products sales taxes and as
"Taxes other than income taxes" for other types of taxation. In each category taxation is made up of taxes levied at
various rates in different jurisdictions.
Operations in the Russian Federation are subject to Federal and city tax rates that total 9.5% and a regional tax rate that
varies from 10.5% to 14.5% at the discretion of the individual regional administration. The majority of the Group's operations
in Russia were subject to a combined statutory tax rate of 24%.
There are not currently, and have not been during the three years ended December 31, 2005, any provisions in the
taxation legislation of the Russian Federation to permit the Group to reduce taxable profits in a Group company by
offsetting tax losses in another Group company against such profits. Tax losses of a Group company in the Russian
Federation may, however, be used fully or partially to offset taxable profits in the same company in any of the ten years
following the year of loss, subject to the restriction that no more than 50% of the taxable profit in 2006 can be reduced
by loss relief. Starting from January 1, 2007 this restriction will no longer apply.
Domestic and foreign components of income before income taxes were:
Year ended
December 31, 2005
Year ended
December 31, 2004
Year ended
December 31, 2003
Domestic 7,992 5,167 3,298
Foreign 918 841 1,278
Income before income taxes 8,910 6,008 4,576
Domestic and foreign components of income taxes were:
Year ended
December 31, 2005
Year ended
December 31, 2004
Year ended
December 31, 2003
Current
Domestic 2,194 1,511 883
Foreign 107 103 56
Current income tax expense 2,301 1,614 939
Deferred
Domestic 61 76 49
Foreign 105 70 19
Deferred income tax expense 166 146 68
Total income tax expense 2,467 1,760 1,007
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