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

7. Income Taxes

v3.19.1
7. Income Taxes
12 Months Ended
Dec. 31, 2018
Income Taxes  
Income Taxes

Note 7 — Income Taxes

 

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

 

    2018     2017     2016*  
Current tax                        
In respect of the current year   $ 611,501     $ 166,252     $ 34,261  
In respect of the prior year     (20,985 )     (14,227 )     6,663  
Others fiscal unit **     1,220       6,614       1,443  
      591,736       158,639       42,367  
Deferred tax (see note 8 — Deferred Taxes)                        
In respect of the current year     (273,071 )     15,867       (130,306 )
      (273,071 )     15,867       (130,306 )
Total income tax expense/(benefit) recognized in the current year relating to continuing operations   $ 318,665     $ 174,506     $ (87,939 )

 

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

 

    2018     2017     2016*  
Profit/(loss) before tax from continuing operations   $ 1,335,607     $ (2,758,561 )   $ (427,636 )
Income tax expense/(benefit) calculated at 27.9%, 27.9% and 31.4% for the year ended December 31, 2018, 2017 and 2016 respectively   $ 372,634     $ (769,639 )   $ (134,278 )
Effect of (income)/expenses that are exempt from taxation     (160,645 )           9,795  
Effect of expenses that are not deductible in determining taxable profit     82,003       235,350       180,042  
Effect of unused tax losses and tax offsets not recognized as deferred tax assets     (300,335 )     746,964       136,125  
Effect of previously unrecognized and unused tax losses and deductible temporary differences now recognized as deferred tax assets           (28,760 )     (34,200 )
Effect of new tax rule in fiscal unit **     1,220       6,614       (48,284 )
Effect of prior year taxes     (20,985 )     (14,227 )     6,663  
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  
Effect of sale of investment properties     428,644              
Others     (83,871 )     (1,796 )     39,054  
Income tax expense/(benefit) recognized in profit or loss relating to continuing operations (current & deferred)   $ 318,665     $ 174,506     $ (87,939 )

 

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

 

The tax rate used for the 2018, 2017 and 2016 reconciliations above is the tax rate of 27.9% on taxable profits in Italy, respectively. This tax rate consists of both IRES (an Italian corporate income tax of 24%) and IRAP (an Italian regional production tax of 3.9%).

 

** During 2016, the Italian fiscal authority issued a new tax rule beginning in the fiscal year ended December 31, 2015 and continuing through 2018 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).