to download Telecom Italia Annual Report 2011 - Company Reporting

Tax loss carryforwards considered in the calculation of deferred tax assets amount to
1,691 million euros at December 31, 2011 (2,025 million euros at December 31, 2010) and mainly
refer to the Brazil Business Unit, to the Lan Med group and to the company Telecom Italia International.
Instead, deferred tax assets of 881 million euros (1,197 million euros at December 31, 2010) have not
been recognized on 2,876 million euros of tax loss carryforwards since, at this time, their recoverability
is not considered probable.
At December 31, 2011, deferred taxes have not been recognized on tax-suspended reserves and
undistributed earnings of subsidiaries, in that their distribution or utilization is not foreseen for purposes
other than the absorption of losses.
Current income tax payables
Current income tax payables amount to 399 million euros (279 million euros at December 31, 2010).
They are composed of the following:
(millions of euros) 12/31/2011 12/31/2010
Income tax payables:
non-current 63 44
current 336 235
Total 399 279
Specifically, the non-current portion of 63 million euros refers principally to the Brazil Business Unit
(49 million euros) and the Brazilian company TI Latam Participações e Gestão Administrativa Ltd
(12 million euros). The entire amount of the latter and a part of that referring to the Brazil Business Unit
comes from taking part in the Brazilian Federal authority’s tax amnesty program “Programa de
Recuperação Fiscal (REFIS)”.
The current portion of 336 million euros mainly regards the Brazil Business Unit (152 million euros), the
Argentina Business Unit (109 million euros) and also the IRES payable on the Telecom Italia Group’s
income tax consolidation (60 million euros).
Income tax expense
Income taxes amount to 1,643 million euros and increased 1,093 million euros compared to 2010
(550 million euros).
Details are as follows:
(millions of euros) 2011 2010
Current taxes for the year 1,563 1,347
Difference in prior years estimates (98) (89)
Total current taxes 1,465 1,258
Deferred taxes 178 (708)
Total taxes on continuing operations (a) 1,643 550
Total taxes on Discontinued operations/Non-current assets held for sale (b) - -
Total income tax expense for the year (a+b) 1,643 550
Income taxes in 2010 included a benefit of more than 600 million euros which came from the
recognition of deferred tax assets by the Brazil Business Unit in connection with the tax loss
carryforwards recorded in prior years which became recoverable on the basis of the prospects of profits
by the companies in the Business Unit.
Telecom Italia Group
Consolidated Financial Statements Note 11 – Income taxes 200