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The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income.
Deferred income tax is recognized, using the so-called "liability method", on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the IFRS consolidated financial statements, which then lead in the future to a higher (passive deferred tax) or lower (active deferred tax) level of taxable income (temporary tax-related measurement difference). If in a transaction, which does not represent a business combination, deferred income tax arises from the initial recognition of an asset or liability that at the time of the transaction affects neither accounting nor taxable profit or loss, then the tax deferral is not recognized both at this initial point in time or afterwards.
Deferred income tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. The deferred tax assets also include tax reimbursement claims arising from the expected future utilization of existing tax losses that are guaranteed to be realized within a period of five years.
Deferred income tax is provided on the temporary differences arising from investments in non-consolidated subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
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CURRENT TAX IS A BASED ON THAT TIME OF TAXABLE TRANSACTION
EX : SALES TAX
DEFFERED TAX IS BASED ON TRANSACTIONS FINALISED REPORT
EX: INCOME TAX
