Notes to the consolidated financial statements - Swisscom

The increase in the fair value of the real estate between the date it was either bought or
constructed and January 1, 1998 – date of privatization – is exempt from tax. The increase
in the fair value of real estate after that date is taxable. The amount of tax expense
recorded is based on management’s best estimates of the fair value of real estate at January
1, 1998 and is subject to agreement by the tax authorities and therefore the amount
of the tax provision attributable to this gain could change.
Prior to the impairment, Swisscom’s tax basis of its investment in debitel exceeded its
carrying basis by CHF 620 million. Accordingly the impairment charge for tax purposes
exceeded that recorded in the consolidated financial statements hence Swisscom recorded
a tax benefit of CHF 155 million.
Deferred income tax assets are recognized for tax loss carry forwards to the extent that
the realization of the related tax benefit through the future taxable profits is probable.
Certain subsidiaries of Swisscom have unrecognized tax losses of CHF 210 million and CHF
259 million in 2000 and 2001 respectively, to carry forward against future taxable income;
these tax losses will expire mainly after 2007.
Deferred income taxes are calculated in full on temporary differences under the liability
method using a tax rate of 25% in 2000 and 2001.
The tax effects of temporary differences that give rise to deferred tax assets and liabilities
at December 31, 2000 and 2001 were as follows:
CHF in millions
Assets associated with
Accrued pension cost
Intangible assets
Other current and non current assets
Tax losses
Total deferred tax asset
Liabilities associated with
Property, plant and equipment
Other non current assets
Trade accounts receivable and other current assets
Accrued liabilities
Other long-term liabilities
Total deferred tax liabilities
Net deferred tax (liabilities) assets
Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to set off current tax assets against current tax liabilities and when the deferred income
taxes relate to the same tax authority. The following amounts, determined after appropriate
offsetting, are shown in the consolidated balance sheet:
CHF in millions
Deferred tax assets
Deferred tax liabilities
35 Swisscom Consolidated financial statements
2000
323
–
36
15
374
(362)
(21)
(32)
(45)
(79)
(539)
(165)
2000
51
(216)
2001
127
747
48
9
931
(435)
(31)
(32)
(14)
(75)
(587)
344
2001
811
(467)