Our performance in 2009 - Sappi

6. Taxation (benefit) charge continued
Reconciliation of the tax rate
2009 annual report
2009 2008 2007
(Loss) profit before taxation (218) 188 249
Profit-making regions 133 560 424
Loss-making regions (351) (372) (175)
Taxation at the average statutory tax rate (60) 72 68
Profit-making regions at 28% (2008: 30%; 2007: 28%) 38 167 119
Loss-making regions at 28% (2008: 26%; 2007: 29%) (98) (95) (51)
Net exempt income and non-tax deductible expenditure (32) (51) (34)
Effect of tax rate changes (3) (9) (19)
Deferred tax asset not recognised 72 103 49
Utilisation of previously unrecognised tax assets (22) (19) (11)
Secondary Tax on Companies (STC) 4 7 8
Prior year adjustments (4) (19) (15)
Other taxes 4 2 1
Taxation (benefit) charge (41) 86 47
Effective tax rate for the year 19% 46% 19%
Our effective tax rate reflects the benefits from reduced tax rates in South Africa (2009: nil; 2008: US$9 million; 2007: nil),
Germany (2009: US$3 million; 2008: nil; 2007: US$19 million ) and the Netherlands (2009: nil; 2008: nil; 2007: US$2 million).
The corporate tax rate in South Africa was reduced from 29% in 2007 to 28% in 2008. The corporate tax rate (including
trade tax) in Germany was reduced from 38% in 2006 to 30% in 2007 and 28.6% in 2009. In the Netherlands, the corporate
tax rate was reduced from 29.6% in 2006 to 25.5% in 2007. In addition, a taxation charge of US$2 million was recognised
in 2007 as a result of the substantively enacted STC rate adjustment from 12.5% to 10% (effective date: 01 October 2007).
On 09 November 2009, the directors decided not to declare a dividend in respect of the 2009 financial year (refer to note 8).
(1) The imposition of Secondary Tax on Companies (STC) effectively means that a dual corporate taxation system exists in South Africa comprising a normal
income taxation and STC. Liability for STC is determined independently from normal income taxation and is paid by South African companies at the flat rate
of 10% in respect of the amount of dividends declared less all dividends which accrued to them (but subject to certain exclusions) during the relevant ‘dividend
cycle’. ‘Dividend cycle’ means the period commencing on the day following the date of accrual to a company’s shareholders of the last dividend declared by
that company and ending on the date on which the dividend in question accrues to the shareholder concerned. An excess of dividends accruing to a company
over dividends paid may be carried forward to subsequent dividend cycles as an STC credit.
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financials