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Starting from January 1, 2007, the Company adopted the provisions of
FIN 48 (Note 2). The reconciliation of the total amounts of unrecognized
tax benefit for the year ended December 31, 2007 presented in the table
below:
Balance as of January 1, 2007 adoption $44,344
The gross amounts of the increase (decreases)
in unrecognized tax benefits, included in income tax expense
in the accompanying consolidated statements of income, as a result of:
Increase of tax positions taken during the current period 3,146
Decrease of tax positions taken during the current period (353)
Increase of tax positions taken during a prior period 5,880
Decrease of tax positions taken during a prior period (9,441)
The amount of decreases in the unrecognized tax benefits
as a result of resolution through litigation (1,063)
Foreign currency translation adjustment 2,567
Balance as of December 31, 2007 $45,080
The amount of total unrecognized tax benefit as of December 31, 2007,
includes US$20,169 of unrecognized tax benefits that, if recognized,
would affect the effective income tax rate in any future periods.
At January 1, 2007, the Company had accrued US$12,519 and US$7,085
for the potential payment of fines and penalties (interest), respectively.
For the year ended December 31, 2007, the Company accrued additional
fines and penalties (interest) of US$1,488 and US$4,826, respectively.
The total amounts of fines and penalties (interest) recognized in the
consolidated balance sheet as of December 31, 2007, comprised US$10,311
and US$10,148, respectively.
The Russian Tax inspectorate has completed its examination of VimpelCom’s
tax filings for the years 2003-2004 (Note 18). The court hearings related
to the tax inspectorate claims resulting from that examination, if finalized
in 2008 could possibly change the amount of the unrecognized income tax
benefits.
The total amount of unrecognized tax benefit that could significantly
increase or decrease within 12 months due to lapse of statutory limitation
term or the results of foregoing litigations (Note 19) comprised US$37,077
as of December 31, 2007.
Due to the fact that, subject to certain legal issues, the 2004 year
remains open to a repeated examination by the tax authorities, the
Company considers the tax years from 2004 through 2007 to be open.
VimpelCom’s subsidiaries in Tajikistan, Ukraine and Uzbekistan are
subject to income tax examinations for the tax years 2004 through 2007;
the subsidiary in Georgia is subject to income tax examination for the
tax years 2001 through 2007; the subsidiary in Kazakhstan is subject to
income tax examination for the tax years 2003 through 2007; and the
subsidiary in Armenia is subject to income tax examination for 2006–
2007. Management is unable to reliably predict the outcome of any
tax examinations and the materiality of their impact on VimpelCom’s
consolidated financial statements, if any.
ВымпелКом / Годовой отчет 2007
The following deferred tax balances were calculated by applying the
presently enacted statutory tax rate applicable to the period in which
the temporary differences between the carrying amounts and tax base
of assets and liabilities are expected to reverse. The amounts reported
in the accompanying consolidated financial statements at December 31
consisted of the following:
2007 2006
Deferred tax assets:
Short term
Accrued operating and interest expenses $22,255 $27,413
Deferred revenue 70,864 87,432
Bad debts assets 5,731 881
Derivatives 2,678 3,059
Loss carry-forwards
Long term
8,408 8,681
Accrued operating and interest expenses 11,189 3,372
Property and equipment 5,707 2,297
Loss carry-forwards 610 -
Total deferred tax assets 127,442 133,135
Valuation allowance (10,280) (10,455)
Deferred tax liabilities:
Short term
117,162 122,680
Bad debts liabilities
Long term
1,249 1,632
Property and equipment 312,445 222,753
Licenses and allocation of frequencies 175,959 219,960
Other intangible assets 58,225 50,827
Other non-current assets 43,818 37,509
Other non-current liabilities 2,043 2,283
Forward agreement 1,292 362
Total deferred tax liabilities 595,031 535,326
Net deferred tax liabilities 477,869 412,646
Add current deferred tax assets 98,407 115,379
Total long-term net deferred tax liability $576,276 $528,025
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