Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

7. Income Taxes

v3.8.0.1
7. Income Taxes
12 Months Ended
Dec. 31, 2017
Income Taxes  
Income Taxes

Note 7 — Income Taxes

 

Income taxes relating to continuing operations for the years ended December 31 are as follows:

 

    2017     2016*     2015*  
Current tax                        
In respect of the current year   $ 166,252     $ 34,261     $ 183,005  
In respect of the prior year     (14,227     6,663       (12,664 )
Others fiscal unit **     6,614       1,443       (148,834 )
      158,639       42,367       21,507  
                         
Deferred tax (see note 8 — Deferred Taxes)                        
In respect of the current year     15,867       (130,306 )     122,386  
      15,867       (130,306 )     122,386  
Total income tax expense/(benefit) recognized in the current year relating to continuing operations   $ 174,506     $ (87,939 )   $ 143,893  

 

The income tax expense for the years ended December 31 can be reconciled to the accounting profit as follows:

 

    2017     2016*     2015*  
Profit/(loss) before tax from continuing operations   $ (2,758,561 )   $ (427,636 )   $ (5,969,746 )
                         
Income tax expense/(benefit) calculated at 27.9%, 31.4% and 31.4% for the year ended December 31, 2017, 2016 and 2015 respectively   $ (769,639 )   $ (134,278 )   $ (1,874,501 )
Effect of (income)/expenses that are exempt from taxation           9,795       965,868  
Effect of expenses that are not deductible in determining taxable profit     235,350       180,042       460,519  
Effect of unused tax losses and tax offsets not recognized as deferred tax assets     746,964       136,125       836,295  
Effect of previously unrecognized and unused tax losses and deductible temporary differences now recognized as deferred tax assets     (28,760 )     (34,200 )     (34,904 )
Effect of new tax rule in fiscal unit **     6,614       (48,284 )     (148,834 )
Effect of prior year taxes     (14,227     6,663       (12,664 )
Effect of future change of fiscal aliquota*** on deferred taxes (previous years)           (261,115 )      
Effect of future change of fiscal aliquota on deferred taxes (generated in 2016)           18,258        
Others     (1,796)       39,054       (47,886
Income tax expense/(benefit) recognized in profit or loss relating to continuing operations (current & deferred)   $ 174,506     $ (87,939 )   $ 143,893  

 

 

*   Restated for discontinued operations (see note 9 — Discontinued Operations)

 

The tax rate used for the 2017, 2016 and 2015 reconciliations above is the tax rate of 27.9%, 27.9% and 31.4% on taxable profits in Italy, respectively. This tax rate consists of both IRES (an Italian corporate income tax) and IRAP (an Italian regional production tax).

 

** During 2016, the Italian fiscal authority issued a new tax rule beginning in the fiscal year ended December 31, 2015 and continuing through 2017 allowing utilization of fiscal unit structure in tax reporting to offset and utilize operating losses amongst subsidiaries with common ownership, resulting in tax benefits to the Group.

 

***Aliquota is the combined total tax rate of IRES and IRAP (see note 8 — Deferred Taxes).