Selected accounting policies – Note 5

Income tax for the reporting period comprises current tax and deferred tax. The tax is recognized in the financial result, excluding the extent to which it applies directly to items recognized in other comprehensive income or equity. In this case the tax is also recognized respectively in other comprehensive income or equity. The current income tax liability is calculated on the basis of the applicable tax regulations.

The deferred tax liability and assets resulting from temporary differences between the tax base of assets and liabilities and their carrying amount in the consolidated financial statements – is recognized in the full amount, using the balance sheet method; also, deferred tax assets are recognized on unused tax losses. Deferred tax liabilities are not recognized to the extent they arise from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit no taxable profit (tax loss). Deferred tax is determined using tax rates (and regulations) enacted or substantially enacted as at the final day of the reporting period which, pursuant to expectations, will prevail at the time of realization of pertinent deferred tax assets or settlement of the deferred tax liability.

Deferred tax assets are recognized if it is probable that in the future taxable income will be generated which will make it possible to use the temporary differences.

A deferred tax liability resulting from temporary differences resulting from investments in subsidiaries and associates is recognized unless the timing of the reversal of temporary differences is controlled by the Group and it is probable that in the foreseeable future these differences will not be reversed.

Deferred tax assets and liabilities are subject to offsetting if there is an enforceable legal title to set off current income tax assets against the current income tax liabilities.