11. Income Tax Expense
The Group’s applicable tax rate is the income tax rate of 20%.
| Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|---|---|---|
| Current tax expense | ||
| Current year | (1,750,546) | (1,071,666) |
| Adjustment for prior years | 838,989 | 896,304 |
| (911,557) | (175,362) | |
| Deferred tax expense | ||
| Origination and reversal of temporary differences | (356,357) | (485,541) |
| Change in tax the base of property, plant and equipment | (573,400) | (627,599) |
| (929,757) | (1,113,140) | |
| (1,841,314) | (1,288,502) | |
In 2011 the Group recalculated income tax for prior periods (2009-2010) related to the deductibility for tax purposes of certain operating expenses which were previously capitalized in the tax value of property, plant and equipment and accelerated depreciation of property, plant and equipment operated in an aggressive environment. In 2010 a similar recalculation was carried out by the Group for prior periods of 2006-2008.
As a result, income tax overprovided in prior periods, in accordance with the adjusted tax declarations submitted to the tax authorities, amounted to RUB 838,989 thousand (2010: RUB 896,304 thousand). Also the Group corrected the tax value of property, plant and equipment which resulted in an increase of deferred tax liabilities of the Group in the amount of RUB 573,400 thousand (2010: RUB 627,599 thousand).
Reconciliation of effective tax rate:
| Year ended 31 December 2011 |
% | Year ended 31 December 2010 |
% | |
|---|---|---|---|---|
| Profit before income tax | 7,375,517 | 100 | 6,389,779 | 100 |
| Income tax expense at applicable tax rate | (1,475,103) | (20) | (1,277,956) | (20) |
| Adjustment for prior years | 838,989 | 11 | 896,304 | 14 |
| Change in tax base of property, plant and equipment | (573,400) | (8) | (627,599) | (10) |
| Net effect of other items which are not deductible/not taxable for taxation purposes | (631,800) | (9) | (279,251) | (4) |
| (1,841,314) | (26) | (1,288,502) | (20) |
Return to Notes to the Consolidated Financial Statements for the year ended 31 December 2011