28. Income Taxes
Income tax expense comprises the following:
| In billions of Russian Roubles | 2012 | 2011 |
|---|---|---|
| Current tax | 101.0 | 75.7 |
| Deferred tax | 9.9 | 3.5 |
| Less: Deferred tax recognised in other comprehensive income | (10.9) | 0.6 |
| Income tax expense for the year | 100.0 | 79.8 |
The income tax rate applicable to the major part of the Group’s income for 2012 is 20% (2011: 20%).
Reconciliation between the expected and the actual taxation charge is provided below:
| In billions of Russian Roubles | 2012 | 2011 |
|---|---|---|
| IFRS profit before tax | 447.9 | 395.7 |
| Theoretical tax charge at statutory rate (2012: 20%; 2011: 20%) | 89.6 | 79.2 |
| Tax effect on income on government securities taxed at different rates | (3.2) | (3.3) |
| Tax effect of items which are not deductible or assessable for taxation purposes: | ||
| Non-deductible staff costs | 1.7 | 2.6 |
| Unrecognised tax assset of subsidiaries | 9.8 | 0.6 |
| Non-deductible losses on cessions | 1.1 | 0.6 |
| Other non-temporary differences | 1.0 | 0.1 |
| Income tax expense for the year | 100.0 | 79.8 |
Differences between IFRS and Russian statutory taxation regulations give rise to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their tax bases. The tax effect of the movements in these temporary differences is detailed below and is recorded at the rate of 20% (2011: 20%), except for income on state, municipal and certain other types of securities that is taxed at 15%, 9% and 0% (2011: 15%, 9% and 0%) and on dividends that is taxed at a standard rate of 9% (2011: 9%).
| In billions of Russian Roubles | 31 December 2011 | Business combinations | Credited/ (charged) to profit or loss | Recognised in other comprehensive income | Unrecognised currency translation differences | 31 December 2012 |
|---|---|---|---|---|---|---|
| Tax effect of deductible temporary differences | ||||||
| Deferred fees and commissions income | 5.1 | 0.5 | (0.3) | — | — | 5.3 |
| Accrued employee benefit costs | 0.1 | 0.4 | 0.4 | — | — | 0.9 |
| Low value items write-off | 1.9 | — | 0.6 | — | — | 2.5 |
| Accrued interest on loans | 5.2 | (0.4) | (1.0) | — | — | 3.8 |
| Fair valuation of trading securities and securities designated at fair value through profit or loss | 9.3 | — | 7.7 | — | — | 17.0 |
| Other | (8.6) | — | 14.5 | — | — | 5.9 |
| Gross deferred tax asset | 13.0 | 0.5 | 21.9 | — | — | 35.4 |
| Tax effect of taxable temporary differences | ||||||
| Loan impairment provision | (4.5) | 3.0 | (12.1) | — | (0.1) | (13.7) |
| Premises and equipment | (22.4) | 0.7 | 1.0 | — | — | (20.7) |
| Fair valuation of investment securities available for sale | 2.4 | — | 1.3 | (10.9) | — | (7.2) |
| Other | (1.9) | (6.7) | (11.1) | — | 0.2 | (19.5) |
| Gross deferred tax liability | (26.4) | (3.0) | (20.9) | (10.9) | 0.1 | (61.1) |
| Total net deferred tax asset / (liability) | (13.4) | (2.5) | 1.0 | (10.9) | 0.1 | (25.7) |
| In billions of Russian Roubles | 31 December 2010 | Business combinations | Credited/ (charged) to profit or loss | Recognised in other comprehensive income | 31 December 2011 |
|---|---|---|---|---|---|
| Tax effect of deductible temporary differences | |||||
| Deferred fees and commissions income | 5.8 | — | (0.7) | — | 5.1 |
| Accrued employee benefit costs | — | — | 0.1 | — | 0.1 |
| Low value items write-off | 1.3 | — | 0.6 | — | 1.9 |
| Accrued interest on loans | 6.6 | — | (1.4) | — | 5.2 |
| Fair valuation of investment securities available for sale | 4.2 | — | 5.1 | — | 9.3 |
| Other | — | — | (8.6) | — | (8.6) |
| Gross deferred tax asset | 17.9 | — | (4.9) | — | 13.0 |
| Tax effect of taxable temporary differences | |||||
| Loan impairment provision | (2.9) | — | (1.6) | — | (4.5) |
| Premises and equipment | (17.9) | — | 2.8 | (7.3) | (22.4) |
| Fair valuation of trading securities and securities designated at fair value through profit or loss | (5.5) | — | — | 7.9 | 2.4 |
| Other | — | (1.5) | (0.4) | — | (1.9) |
| Gross deferred tax liability | (26.3) | (1.5) | 0.8 | 0.6 | (26.4) |
| Total net deferred tax asset / (liability) | (8.4) | (1.5) | (4.1) | 0.6 | (13.4) |
As at 31 December 2012, the temporary difference associated with investments in subsidiaries in the statement of financial position of the parent company amounted to 27.3 billion RUB (2011: 20.5 billion RUB). In accordance with IAS 12 Income Taxes respective deferred tax asset of 5.5 billion RUB (2011: respective deferred tax asset of 4.1 billion RUB) was not recognized in the financial statements.