(i) Income tax expense
| for the year ended | ||
|---|---|---|
| 31 December 2016 | 31 December 2015 | |
| Current tax expense | 126.4 | 270.6 |
| Change in deferred tax | (98.2) | (100.0) |
| Correction of income tax returns of previous years | (15.8) | (1.6) |
| Income tax expense in the income statement | 12.4 | 169.0 |
| for the year ended | ||
|---|---|---|
| Change in deferred income tax | 31 December 2016 | 31 December 2015 |
| Tax losses carried forward | (157.5) | 22.4 |
| Receivables and other assets | (33.0) | (4.1) |
| Liabilities | 215.1 | (28.0) |
| Other property, plant and equipment and intangible assets | (136.2) | (119.0) |
| Other | 13.4 | 28.7 |
| Change in deferred tax recognized in income statement – total | (98.2) | (100.0) |
(ii) Income tax recognized in the statement of other comprehensive income
| for the year ended | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2016 | 31 December 2015 | ||||||
| Change in deferred income tax on hedge valuation | 1.9 | 1.1 | |||||
| Income tax expense recognized in other comprehensive income - total | 1.9 | 1.1 | |||||
(iii) Effective tax rate reconciliation
| for the year ended | ||
|---|---|---|
| 31 December 2016 | 31 December 2015 | |
| Gross profit | 1,033.4 | 1,332.4 |
| Income tax at applicable statutory tax rate of 19% | 196.3 | 253.2 |
| Tax amortization of intangible assets | (17.2) | (8.9) |
| Permanent differences on a transaction eliminated on consolidation | (104.3) | - |
| Other | (62.4) | (75.3) |
| Tax expense for the year | 12.4 | 169.0 |
| Effective tax rate | 1.2% | 12.7% |
(iv) Deferred tax assets
| 31 December 2016 | 31 December 2015 | |
|---|---|---|
| Tax losses carried forward | 195.2 | 9.8 |
| Liabilities | 401.9 | 502.0 |
| Tangible assets | 114.7 | 76.0 |
| Receivables and other assets | 51.0 | 49.3 |
| Other | 2.7 | 14.0 |
| Total deferred tax assets | 765.5 | 651.1 |
| Set off of deferred tax assets and liabilities | (532.8) | (563.5) |
| Deferred tax assets in the balance sheet | 232.7 | 87.6 |
(v) Tax loss
| 31 December 2016 | 31 December 2015 | |
|---|---|---|
| 2016 tax loss carried forward | 666.7 | - |
| 2015 tax loss carried forward | 269.7 | 6.6 |
| 2014 tax loss carried forward | 35.2 | 22.9 |
| 2013 tax loss carried forward | 51.6 | 4.5 |
| 2012 tax loss carried forward | 67.8 | 24.4 |
| 2011 tax loss carried forward | 29.2 | 18.6 |
| Tax losses carried forward – total | 1,120.2 | 77.0 |
(vi) Tax losses recognized
| 31 December 2016 | 31 December 2015 | |
|---|---|---|
| 2016 tax loss carried forward | 664.3 | - |
| 2015 tax loss carried forward | 246.7 | 4.1 |
| 2014 tax loss carried forward | 4.3 | 22.9 |
| 2013 tax loss carried forward | 48.8 | 4.5 |
| 2012 tax loss carried forward | 61.4 | 14.8 |
| 2011 tax loss carried forward | 29.2 | 4.8 |
| Tax losses carried forward – total | 1,054.7 | 51.1 |
As at 31 December 2016 the Group recognized deferred tax asset on tax losses to the extent that it was probable that they would be utilized in the future.
According to Art. 7 of the Polish Corporate Income Tax Act dated 15 February 1992, tax losses incurred in a given financial year can be utilized in the subsequent five fiscal years. However, no more than 50% of a tax loss for any given year can be utilized in a single subsequent fiscal year.
(vii) Deferred tax liabilities
| 31 December 2016 | 31 December 2015 | |
|---|---|---|
| Receivables and other assets | 73.6 | 76.9 |
| Liabilities | 12.5 | 10.4 |
| Tangible and intangible assets | 1,170.3 | 1,033.2 |
| Other | 63.3 | 58.8 |
| Total deferred tax liabilities | 1,319.7 | 1,179.3 |
| Set off of deferred tax assets and liabilities | (532.8) | (563.5) |
| Deferred tax liabilities in the balance sheet | 786.9 | 615.8 |
The tax authorities may at any time inspect the books and records within 5 years from the end of the year when a tax declaration was submitted, and may impose additional tax assessments with penalty interest and penalties. The Group's management is not aware of any circumstances, which may give rise to a potential material liability in this respect.