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11. Income tax

2013

2012

Current income tax charge

195.4

110.8

Deferred income tax

4.6

80.6

Total income tax

200.0

191.4

Reconciliation of the income tax estimated based on the applicable tax rate to the income tax is presented below:

2013

2012

Profit before income tax

430.3

357.6

Tax rate applicable in accordance with legislation

20%

20%

Theoretical income tax expense at tax rate in accordance with legislation

(86.1)

(71.5)

Tax effect of items which are not deductible or assessable for taxation purposes:

Non-taxable income

3.3

8.6

Non-deductible expenses

(89.0)

(50.8)

Unrecognised current year tax losses

(1.1)

(4.9)

Recognition of previously unrecognised tax losses

4.7

3.8

Write-off of deferred tax assets

(31.2)

(65.0)

Prior years income tax adjustments

(0.6)

(11.6)

Total income tax

(200.0)

(191.4)

During the year the Group revised its estimates related to the deductibility of tax losses of Vladavia and wrote off deferred tax assets in the amount of USD 31.2 million (2012: USD 65.0 million related to AK Rossiya and Vladavia).

31 December 2013

Movements
for the year

31 December 2012

Movements
for the year

31 December 2011

Tax effect of temporary differences:
Tax loss carry forwards Tax loss carry-forwards for different years expire in 2014 to 2022

14.0

(32.2)

46.2

(33.8)

80.0

Long-term financial investments

1.0

(0.1)

1.1

1.8

(0.7)

Accounts receivable

1.3

(1.9)

3.2

(10.5)

13.7

Property, plant and equipment

37.6

(7.8)

45.4

3.0

42.4

Accounts payable

44.7

26.0

18.7

0.6

18.1

Derivative financial instruments

15.6

5.0

10.6

4.7

5.9

Deferred tax assets before tax set off

114.2

(11.0)

125.2

(34.2)

159.4

Tax set off

(47.8)

(18.3)

(29.5)

(10.2)

(19.3)

Deferred tax assets after tax set off

66.4

(29.3)

95.7

(44.4)

140.1

Property, plant and equipment

(65.3)

4.0

(69.3)

(36.9)

(32.4)

Customs duties related to the imported aircraft under operating leases

(18.4)

6.8

(25.2)

3.6

(28.8)

Long-term financial investments

(0.5)

5.2

(5.7)

(4.7)

(1.0)

Accounts receivable

(4.9)

(1.4)

(3.5)

(1.4)

(2.1)

Accounts payable

(9.1)

(9.6)

0.5

(2.7)

3.2

Tax loss carry-forwards

-

-

-

(0.6)

0.6

Deferred tax liabilities before tax set off

(98.1)

5.1

(103.2)

(42.7)

(60.5)

Tax set off

47.8

18.3

29.5

10.2

19.3

Deferred tax liabilities after tax set off

(50.3)

23.4

(73.7)

(32.5)

(41.2)

Movements for the year, net

(5.9)

(76.9)

Less deferred tax recognised directly in equity Deferred tax asset in respect of the change in the fair value of the derivative financial instruments of USD 0.1 million (2012: deferred tax liability of USD 2.3 million) has been recognised in these consolidated financial statements (Note 24).

(0.1)

2.3

Assets held for sale

-

(2.2)

Translation from the functional currency to the presentation currency

1.4

(3.8)

Income tax for the year

(4.6)

(80.6)

A deferred tax liability in relation to temporary differences of USD 5.9 million (2012: USD 6.3 million) relating to investments in subsidiaries of the Group has not been recognised in these consolidated financial statements as the Group is able to control the timing of reversal of the temporary difference, and reversal is not expected in the foreseeable future.

Management believes that the deferred tax assets of USD 0.1 million as at 31 December 2013 (31 December 2012: USD 0.1 million) and deferred tax liabilities of RUB USD 0.1 million as at 31 December 2013 (31 December 2012: USD 0.1 million) are recoverable after more than twelve months after the end of the reporting period.

Notes in Consolidated Statements:

Consolidated Statement of Profit or Loss

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

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