Annual Report 2009 - Daiichi Sankyo

9.
Income Taxes
Taxes on income consist of corporation tax, inhabitants’ taxes, and enterprise taxes. The aggregate statutory tax rate on
income before income taxes and minority interests in net income of consolidated subsidiaries was approximately 40.5% for the
years ended March 31, 2009, 2008, and 2007. Income taxes of the foreign consolidated subsidiaries are based generally on the
tax rates applicable in their countries of incorporation.
The actual effective tax rates in the consolidated statements of operations differ from the aggregate statutory tax rate principally
because of the effect of expenses not deductible for tax purposes.
Since the Company reported a loss before income taxes and minority interests, the disclosure for the year ended March 31,
2009 has been omitted.
Since the difference between the statutory tax rate and the effective tax rate does not exceed 5% of the statutory tax rate, the
disclosure for the year ended March 31, 2008 has been omitted.
The following table summarizes the significant differences between the statutory tax rate and the Companies’ effective tax
rate for financial statement purposes for the year ended March 31, 2007:
2007
Statutory tax rate 40.5%
Expenses not deductible for income tax purposes 6.3
Dividend income deductible for income tax purposes (0.7)
Decrease in valuation allowance (4.6)
Tax credit for research and development expenses (5.4)
Other 1.8
Effective tax rate 37.9%
Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2009 and 2008 were as follows:
Thousands of
Millions of yen
U.S. dollars
2009 2008 2009
Deferred tax assets:
Net operating loss carryforwards for income tax purposes ¥116,746 ¥12,847 $1,191,286
Prepaid consigned research and co-development expenses 26,132 20,813 266,653
Depreciation 23,996 24,157 244,857
Loss on revaluation of derivatives 18,828 — 192,122
Unrealized profit on inventories and loss on valuation of inventories 14,030 19,091 143,163
Accrued bonuses 6,270 7,211 63,980
Loss on impairment 2,712 — 27,673
Loss on revaluation of securities 1,880 1,625 19,184
Accrued payable for the shift to defined contribution pension plan 1,175 1,627 11,990
Other 31,919 18,722 325,704
Valuation allowance (26,182) (19,025) (267,163)
Total deferred tax assets 217,506 87,068 2,219,449
Deferred tax liabilities:
Intangible assets (17,005) (4,408) (173,520)
Net unrealized holding gain on investment securities (15,230) (33,958) (155,408)
Reserve for reduction in bases of property, plant and equipment
for income tax purposes (9,418) (11,170) (96,102)
Prepaid pension costs (1,431) (2,348) (14,602)
Other (11,502) (3,236) (117,368)
Total deferred tax liabilities (54,586) (55,120) (557,000)
Net deferred tax assets ¥162,920 ¥31,948 $1,662,449
Daiichi Sankyo Co., Ltd. Annual Report 2009 59