F.26. Income taxes

(CZK million)	2014	2013 restated
Current income taxes	1,433	726
Czech Republic	1,412	700
Other countries	21	26
Income taxes related to previous period	(70)	(53)
Czech Republic	(70)	(50)
Other countries	–	(3)
Deferred income taxes	(535)	184
Czech Republic	(543)	184
Other countries	8	–
Total	828	857

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)	2014	2013 restated
Expected income tax rate	19.00%	19.0%
Earnings before taxes	4,550	5,359
Expected income tax expense (benefit)	864	1,018
Effect of foreign tax rate differential	19	4
Effect of special (lower) tax rate	84	95
Tax exempt income and other tax decreasing items	(523)	(339)
Tax non-deductible expenses and other tax increasing items	474	174
Effect of tax losses	(75)	(28)
Other (local) income taxes	–	–
Foreign WHT not recoverable	7	7
Income taxes for prior years	5	7
Tax reliefs	–	–
Other	(27)	(81)
Tax expense	828	857
Effective tax rate	18.2%	16.0%

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. 2014	31. 12. 2013	31. 12. 2014	31. 12. 2013
Intangible assets	–	–	(152)	(145)
Land and buildings	23	34	(30)	(23)
Loans	75	87	–	–
Financial assets held-to-maturity	–	–	–	–
Financial assets available-for-sale	947	422	–	–
Financial assets at fair value through profit and loss	–	–	(2)	(2)
Deferred acquisition costs	10	8	–	–
Insurance provisions	13	11	(1)	—
Fiscal losses carried forward	4	–	–	–
Deferred tax asset / liability with impact on equity	25	26	(933)	(609)
Other	48	38	(11)	(27)
Total deferred tax asset/liability before set off	1,145	626	(1,129)	(806)
Set off of tax	(1,064)	(550)	1,064	550
Net deferred tax asset/liability	81	76	(65)	(256)

XLS

There are no deferred taxes as at 31.12.2014 for 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)	2014	2013
Balance as at 1 January	(180)	(256)
Deferred income tax for the period	535	(184)
Deferred tax recognised directly in equity	(338)	241
Total deffered tax income for the period	197	57
Business combination	–	22
Net foreign currency translation effects	(1)	(3)
Balance as at 31 December	16	(180)

XLS

Of which relates to Transformed fund:

	Net deferred tax asset/liability
(CZK million)	2014	2013
Balance as at 1 January	(189)	–
Deferred income tax for the period	–	–
Deferred tax recognised directly in equity	189	(189)
Total deffered tax income for the period	189	(189)
Business combination	–	–
Net foreign currency translation effects	–	–
Balance as at 31 December	–	(189)

XLS

The Group did not recognise a deferred tax asset of CZK 452 million (2013: CZK 678 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. 2014	31. 12. 2013 restated
Expire in 1 year	695	1,238
Expire between 1 and 3 years	1,667	1,721
Expire between 3 and 5 years	–	603
Expire in more than 5 years	–	1
Total	2,362	3,563

XLS