IAS 12 para 82, nature of evidence supporting recognition of deferred tax asset, where losses incurred

Glencore plc – Annual report – 31 December 2016

Industry: mining

  1. INCOME TAXES (extract)

Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable. As at 31 December 2016, $2,898 million (2015: $3,736 million) of deferred tax assets related to available loss carry forwards have been brought to account, of which $1,653 million (2015: $1,680 million) are disclosed as deferred tax assets with the remaining balance being offset against deferred tax liabilities arising in the same respective entity. $1,241 million (2015: $1,149 million) of net deferred tax assets arise in entities, primarily domiciled in Switzerland and the DRC that have been loss making for tax purposes in either 2016 or 2015. In evaluating whether it is probable that taxable profits will be earned in future accounting periods prior to any tax loss expiry as may be the case, all available evidence was considered, including approved budgets, forecasts and business plans and, in certain cases, analysis of historical operating results. These forecasts are consistent with those prepared and used internally for business planning and impairment testing purposes. Following this evaluation, it was determined there would be sufficient taxable income generated to realise the benefit of the deferred tax assets and that no reasonably possible change in any of the key assumptions would result in a material reduction in forecast headroom of tax profits so that the recognised deferred tax asset would not be realised.

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