G11 Income tax
Recognized in profit and loss
Income tax expense for the year |
2020 |
2021 |
|---|---|---|
Current tax |
–3,373 |
–4,356 |
Adjustment of taxes attributable to prior years |
190 |
574 |
Total current tax expense |
–3,183 |
–3,782 |
Deferred taxes relating to temporary differences and tax losses carried forward |
666 |
–185 |
Total tax expense |
–2,517 |
–3,967 |
The Group’s recognized tax expense for the continuing operations for the year amounted to SEK 3,967 million (2,517) or 21.5 percent (22.3) of profit before tax.
Reconciliation of the tax expense
The Group’s weighted average tax rate for the continuing operations, calculated in accordance with the statutory tax rate in each country, is 23.5 percent (21.9). The tax rate in Sweden is 20.6 percent (21.4).
Reconciliation of the Group’s weighted average tax rate, based on the tax rate in each country, and the Group’s actual tax expense:
|
2020 |
2021 |
||
|---|---|---|---|---|
|
MSEK |
% |
MSEK |
% |
Profit after financial items |
11,270 |
|
18,460 |
|
Weighted average tax based on each country’s tax rate |
–2,469 |
–21.9 |
–4,331 |
–23.5 |
|
|
|
|
|
Tax effect of |
|
|
|
|
Non-deductible expenses |
–231 |
–2.0 |
–98 |
–0.5 |
Tax-exempt income |
48 |
0.4 |
126 |
0.7 |
Adjustments relating to prior years |
190 |
1.7 |
574 |
3.1 |
Effects of tax losses carried forward, net |
–20 |
–0.2 |
–157 |
–0.9 |
Other |
–35 |
–0.3 |
–81 |
–0.4 |
Total recognized tax expense |
–2,517 |
–22.3 |
–3,967 |
–21.5 |
|
2020 |
2021 |
||||
|---|---|---|---|---|---|---|
|
Before tax |
Tax |
After tax |
Before tax |
Tax |
After tax |
Actuarial gains/losses attributable to defined-benefit pension plans |
–1,146 |
225 |
–921 |
2,492 |
–501 |
1,991 |
Translation differences for the year |
–4,754 |
– |
–4,754 |
3,846 |
– |
3,846 |
Fair-value changes in cash flow hedges for the year |
28 |
–8 |
20 |
48 |
–11 |
37 |
Other comprehensive income |
–5,872 |
217 |
–5,655 |
6,385 |
–512 |
5,873 |
Recognized in the balance sheet
Deferred tax assets and liabilities
The deferred tax assets and liabilities recognized in the balance sheet are attributable to the following assets and liabilities.
|
2020 |
2021 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Deferred tax assets |
Deferred tax liabilities |
Net |
Deferred tax assets |
Deferred tax liabilities |
Net |
||||
Intangible assets |
197 |
–1,445 |
–1,248 |
49 |
–2,263 |
–2,214 |
||||
Property, plant and equipment |
200 |
–1,475 |
–1,275 |
251 |
–1,534 |
–1,283 |
||||
Financial non-current assets |
173 |
–129 |
44 |
104 |
–309 |
–205 |
||||
Inventories |
853 |
–52 |
801 |
1,163 |
–94 |
1,069 |
||||
Receivables |
122 |
–91 |
31 |
177 |
–197 |
–20 |
||||
Interest-bearing liabilities1) |
1,851 |
–6 |
1,845 |
1,717 |
–101 |
1,616 |
||||
Non-interest-bearing liabilities2) |
1,446 |
–28 |
1,418 |
1,312 |
–31 |
1,281 |
||||
Other |
17 |
– |
17 |
4 |
– |
4 |
||||
Tax losses carried forward |
386 |
– |
386 |
222 |
– |
222 |
||||
Interest expenses carried forward |
20 |
– |
20 |
– |
– |
– |
||||
Total |
5,265 |
–3,226 |
2,039 |
4,999 |
–4,529 |
470 |
||||
Offsetting within companies |
–1,167 |
1,167 |
– |
–1,541 |
1,541 |
– |
||||
Total deferred tax assets and liabilities |
4,098 |
–2,059 |
2,039 |
3,458 |
–2,988 |
470 |
||||
|
||||||||||
Unrecognized deferred tax assets
The Group has additional tax losses carried forward of SEK 3,526 million (2,195). The main part of the change for 2021 relates to expiry of tax losses in China and revaluation of tax losses in Austria and Luxembourg. No deferred tax asset was recognized for these tax losses.
The expiry dates of these tax losses carried forward are distributed as follows:
Year |
MSEK |
|---|---|
2022 |
51 |
2023 |
14 |
2024 |
– |
2025 |
25 |
2026 |
485 |
No expiry date |
2,951 |
Total |
3,526 |
Related deferred tax assets were not recognized since utilization of the tax losses carried forward against future taxable profits is not deemed probable in the foreseeable future. The tax value of the unrecognized tax losses amounts to SEK 968 million (639).
Change of deferred tax in temporary differences and unutilized tax losses carried forward
|
2020 |
2021 |
|---|---|---|
Balance at the beginning of the year, net |
1,498 |
2,039 |
Recognized in profit and loss |
666 |
–185 |
Acquisitions/disposals of subsidiaries |
–202 |
–863 |
Recognized in other comprehensive income |
217 |
–512 |
Translation differences |
–136 |
–9 |
Reclassifications |
–4 |
– |
Balance at end of year, net |
2,039 |
470 |
In addition to the deferred tax assets and liabilities, Sandvik reports the following tax liabilities and receivables:
|
2020 |
2021 |
|---|---|---|
Income tax liabilities |
–2,695 |
–2,820 |
Income tax receivables |
676 |
1,158 |
Tax liabilities/receivables, net |
–2,019 |
–1,662 |
Accounting principles
Income tax
Income tax comprises current and deferred tax. Income tax is recognized in profit or loss for the year except when the underlying transaction is recognized in other comprehensive income. In these cases, the associated tax effects are recognized in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect to previous years.
Current tax liabilities are offset against current tax receivables and deferred tax assets are offset against deferred tax liabilities when the entity has a legal right to offset these items and intends to do so.
Deferred tax is recognized based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their value for tax purposes. Deferred taxes are measured at their nominal amount and based on the expected manner of realization or settlement of the carrying amount of the underlying assets and liabilities, using tax rates and fiscal regulations enacted or substantively enacted at the balance sheet date.
Deferred tax assets relating to deductible temporary differences and tax losses carried forward are recognized only to the extent that it is probable they can be utilized against future taxable profits.
Critical estimates and key judgments
Income tax
Significant estimates are made to determine both current and deferred tax liabilities/assets, not least the value of deferred tax assets.
The actual results may differ from these estimates, for instance due to changes in the business climate, changed tax legislation, or the outcome of the final review by tax authorities and tax courts of tax returns.
The recognized provision for ongoing tax litigations and other uncertainties amounted to SEK 893 million (1,267) and is based on management´s best estimate of the outcome.