IAS 12 paras 80 (d), 81(d), explanation of effects of changes in tax rates on income, OCI and equity including US rate changes

RELX Group – Annual report – 31 December 2017

Industry: media

10 Taxation (extract)

The net tax expense charged on profit before tax differs from the theoretical amount that would arise using the weighted average of tax rates applicable to accounting profits and losses of the consolidated entities, as follows:

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The weighted average applicable tax rate for the year was 22.6% (2016: 22.4%, 2015: 22.8%), reflecting the applicable rates in the countries where the Group operates. The Group’s future tax charge will be sensitive to the geographic mix of profits and losses and the tax rates and laws in force in the jurisdictions in which we operate.

In the UK, a reduction in the corporate tax rate from 18% to 17% from April 2020 was enacted on 6 September 2016. In the US, the Tax Cuts and Jobs Act which includes a reduction in the federal corporate tax rate from 35% to 21% from January 2018 was enacted on 22 December 2017. Consequently, the Group has measured its US deferred tax assets and liabilities at the end of the reporting period at a combined (federal and state) tax rate of 26%. This has resulted in the recognition of an exceptional deferred tax credit of £346m in the income statement and a reduction in the reported tax rate to 3.9% (2016: 20.7%, 2015: 22.7%).

The following tax has been recognised in other comprehensive income or directly in equity during the year:

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The measurement of the US deferred tax assets and liabilities has also resulted in a charge of £10m in other comprehensive income and a charge of £5m directly in equity.

 

 

 

 

 

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