F.26. Income taxes

(CZK million)	2015	2014
Current income taxes	1,099	1,433
Czech Republic	1,064	1,412
Other countries	35	21
Income taxes related to previous period	(68)	(70)
Czech Republic	(68)	(70)
Deferred income taxes	(164)	(535)
Czech Republic	(166)	(543)
Other countries	2	8
Total	867	828

XLS

The table below shows the reconciliation between an expected and effective tax rate, which is based on 19% tax rate applicable in the Czech Republic.

(CZK million)	2015	2014 re-presented
Expected income tax rate	19%	19%
Earnings before taxes	6,370	4,961
Expected income tax expense (benefit)	1,210	943
Effect of foreign tax rate differential	18	19
Effect of special (lower) tax rate	(189)	84
Tax exempt income and other tax decreasing items	(343)	(237)
Tax non-deductible expenses and other tax increasing items	223	107
Effect of tax losses	(68)	(75)
Foreign WHT not recoverable	4	7
Income taxes for prior years	(1)	5
Other	12	(25)
Tax expense	867	828
Effective tax rate	14%	18%

XLS

The tax authorities of the territories in which group entities operate may at any time inspect the books and records of group entities within a maximum period of 3 to 10 years depending on the tax jurisdiction subsequent to the reported tax year, and may impose additional tax assessments and penalties. The Group’s management is not aware of any circumstances which may give rise to a potential material liability in this respect.

F.26.1. Deferred tax

	Deferred tax assets		Deferred tax liabilities
(CZK million)	31.12.2015	31.12.2014	31.12.2015	31.12.2014
Intangible assets	–	–	(141)	(152)
Land and buildings	24	23	(39)	(30)
Loans	–	75	–	–
Financial assets available-for-sale	1,187	947	(11)	–
Financial assets at fair value through profit and loss	–	–	(2)	(2)
Deferred acquisition costs	15	10	–	–
Insurance provisions	15	13	–	(1)
Fiscal losses carried forward	1	4	–	–
Deferred tax asset/liability with impact on equity	16	25	(1,179)	(933)
Other	32	48	(15)	(11)
Total deferred tax asset/liability before set off	1,290	1,145	(1,387)	(1,129)
Set off of tax	(1,243)	(1,064)	1,243	1,064
Net deferred tax asset/liability	47	81	(144)	(65)

XLS

There are no deferred taxes for the Transformed fund.

In accordance with the accounting method, the amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted as at the end of the reporting period which, for the year 2015 and the following years, is 19% (2014 – 19%).

	Net deferred tax asset/liability
(CZK million)	2015	2014
Balance as at 1 January	16	(180)
Deferred income tax for the period	141	535
Deferred tax recognised directly in equity	(256)	(338)
Total deffered tax income for the period	(115)	197
Net foreign currency translation effects	2	(1)
Balance as at 31 December	(97)	16

XLS

Of which relates to the Transformed fund:

	Net deferred tax asset/liability
(CZK million)	2015	2014
Balance as at 1 January	–	(189)
Deferred income tax for the period	–	–
Deferred tax recognised directly in equity	–	189
Total deffered tax income for the period	–	189
Balance as at 31 December	–	–

XLS

The Group did not recognise a deferred tax asset of CZK 311 million (2014: CZK 452 million) from deductible temporary differences (unused tax losses) since their realisation is not considered probable.

Tax losses and tax credits, for which no deferred tax was recognised, are presented in the following table:

	Not recognized temporary differences
(CZK million)	31.12.2015	31.12.2014
Expire in 1 year	1,072	695
Expire between 1 and 3 years	561	1,667
Expire between 3 and 5 years	–	–
Expire in more than 5 years	2	–
Total	1,635	2,362

XLS