9. Taxes

in CHF m	2015	2014
Current income taxes	–76	–161
Deferred income taxes	2	9
Total taxes	–74	–152
Thereof reported under discontinued operations	1	8
Total continuing operations	–73	–144

The main elements contributing to the difference between the Group’s overall expected tax expense/rate and the effective tax expense/rate are:

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2015
in CHF m

in %

2014
in CHF m

in %

¹	Calculated based on the income before tax of each subsidiary (weighted average).

Income before taxes from continuing operations

300

379

Income before taxes from discontinued operations

–10

Income before taxes total

313

369

Expected tax expense/rate¹

–62

19.8

–82

22.2

Effect of taxes on items not tax-deductible

–24

7.7

–110

29.8

Effect of utilization and changes in recognition of tax losses and tax credits

–4.2

–2.4

Effect of tax losses and tax credits of current year not recognized

–8

2.6

–13

3.5

Effect of adjustments to taxes recognized in prior periods

–2

0.6

–16

4.3

Effect of tax exempt income and preferential tax rate

–4.5

–16.0

Effect of other items

–5

1.6

–0.3

Effective tax expense/rate

–74

23.6

–152

41.2

Thereof reported under discontinued operations

–0.3

–3.2

Effective tax expense/rate continuing operations

–73

23.3

–144

38.0

Compared to the expected tax rate, the effective tax rate was adversely impacted by dividend tax arising mainly from the repatriation of proceeds from a land sale in India and by the non-recognition of deferred tax asset on tax losses incurred by subsidiaries mainly in China and Canada as their recoverability was not considered probable. On the other hand, the effective tax rate was positively influenced by the utilization of previously unrecognized tax losses/tax credits by subsidiaries in particular in Switzerland and United Kingdom.

The movement of the net deferred income tax balance is as follows:

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in CHF m	PPE and intangible assets	Retirement benefit obligations	Tax losses and tax credits	Other accruals and provisions	Total	Thereof offset within the same jurisdiction	Total
Deferred tax assets at 1 January 2014	60	141	146	111	458	–213	245
Deferred tax liabilities at 1 January 2014	–298	–	–	–35	–333	213	–120
Net deferred tax balance at 1 January 2014	–238	141	146	76	125	–	125
Charged/credited to income from continuing operations	30	–23	–20	18	5
Effect of disposals	6	–3	–	1	4
Total charged/credited to income statement	36	–26	–20	19	9
Charged/credited to other comprehensive income	–	60	–	–	60
Exchange rate differences	–1	–2	9	–1	5
Net deferred tax balance at 31 December 2014	–203	173	135	94	199	–	199
Deferred tax assets at 31 December 2014	50	173	135	112	470	–199	271
Deferred tax liabilities at 31 December 2014	–253	–	–	–18	–271	199	–72
At 1 January 2015	–203	173	135	94	199	–	199
Charged/credited to income from continuing operations	101	–11	–3	–86	1
Effect of disposals	1	–	–	–	1
Total charged/credited to income statement	102	–11	–3	–86	2
Charged/credited to other comprehensive income	–	–6	–	–	–6
Exchange rate differences	16	–10	–5	–11	–10
Net deferred tax balance at 31 December 2015	–85	146	127	–3	185	–	185
Deferred tax assets at 31 December 2015	88	148	128	–	364	–108	256
Deferred tax liabilities at 31 December 2015	–173	–2	–1	–3	–179	108	–71
Net deferred tax balance at 31 December 2015	–85	146	127	–3	185	–	185

Of the deferred tax assets capitalized on tax losses, CHF 76 million refer to tax losses of the US-subsidiaries (2014: CHF 86 million), CHF 10 million to tax losses of the Spanish subsidiaries (2014: CHF 12 million), CHF 8 million to tax losses of the Italian subsidiaries (2014: CHF 11 million) and CHF 4 million to tax losses of the Swiss subsidiaries (2014: CHF 8 million). Clariant considers it probable that these tax losses can be recovered.

Deferred income tax liabilities have not been established for withholding tax and other taxes that would be payable on the unremitted earnings of certain foreign subsidiaries, as such amounts are currently regarded as permanently reinvested. These unremitted earnings totaled CHF 1 734 million at the end of 2015 (2014: CHF 2 470 million).

The tax losses on which no deferred tax assets are recognized are reviewed for recoverability at each balance sheet date. The largest part of these tax losses arose in Switzerland (with a weighted average tax rate of 16.8%), in France (with a tax rate of 33.3%), in China (with a tax rate of 25%) and in Luxemburg (with a tax rate of 29.2%). At present their recoverability is not considered probable.

Tax losses on which no deferred tax assets were recognized are as follows:

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in CHF m	31.12.2015	31.12.2014
EXPIRY BY:
2015	–	12
2016	71	159
2017	60	61
2018	22	25
2019	32	–
after 2019 (2014: after 2018)	260	318
Total	445	575
CHF m	31.12.2015	31.12.2014
Unrecognized tax credits	–	13

Tax credits of CHF 13 million were recognized in 2015. They expire in 2020 or later. In 2014, unrecognized tax credits amounting to about half a million were expiring between 2015 and 2018 and the remaining tax credits of CHF 11 million were expiring in and after 2018.

Temporary differences on which no deferred tax recognized amount to CHF 37 million (2014: CHF 41 million).

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