to download Telecom Italia Annual Report 2011 - Company Reporting

In addition to this effect, the increase in taxes is attributable to the higher taxable base of the Parent,
Telecom Italia, of the Brazil Business Unit and also the consolidation of the Argentina Business Unit for
the full year 2011.
The reconciliation between the theoretical tax expense, using the IRES tax rate in force in Italy (27.5%),
and the effective tax rate for the years ended December 31, 2011 and 2010 is the following:
(millions of euros) 2011 2010
Profit (loss) before tax
From continuing operations (2,624) 4,132
From Discontinued operations/Non-current assets held for sale (13) (7)
Total profit (loss) before tax (2,637) 4,125
Income taxes on theoretical income (loss) (725) 1,134
Income tax effect on increases (decreases) in variations:
Tax losses of the year not considered recoverable 15 18
Tax losses not considered recoverable in prior years and recoverable in future
years (40) (627)
Non-deductible costs 29 36
Non-deductible goodwill impairment charge, Domestic BU/Media BU 2,025 -
Non-taxable Sofora revaluation - (73)
Other net differences 3 (294)
Effective income tax recognized in income statement, excluding IRAP 1,307 194
IRAP 336 356
Total effective income tax recognized in income statement 1,643 550
The impact of Regional Income Tax (IRAP) is not taken into consideration in order to avoid any distorting
effect, since such tax only applies to Italian companies and is calculated on a tax base other than pre-tax
profit.
Telecom Italia Group
Consolidated Financial Statements Note 11 – Income taxes 201