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ANNUAL
REPORT
2018

5.1. Income tax

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- 5.1. Income tax

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Income tax captured in net profit:

	2018	2017
Current tax:	273.3	234.2
– current tax liability	273.7	234.6
– adjustments posted in the current period relating to tax from the previous years	(0.4)	(0.4)
Deferred tax	158.4	346.1
TOTAL INCOME TAX CAPTURED IN NET PROFIT	431.7	580.3

Income tax captured in other comprehensive income

	2018	2017
Deferred tax:
– actuarial gains/(losses)	(13.4)	(1.8)
– change in the value of hedges	3.4	3.8
TOTAL INCOME TAX CAPTURED IN OTHER COMPREHENSIVE INCOME	(10.0)	2.0

Reconciliation of theoretical tax calculated on profit before tax and the statutory tax rate to the income tax liability shown in net profit is as follows:

	2018	2017
Profit before tax	2,192.5	3,123.6
Tax calculated at the rate of 19%	416.6	593.5
Tax effect of income not classified as income according to tax regulations	2.3	(18.8)
Tax effect of costs which are not tax-deductible expenses according to tax regulations	13.2	6.0
Adjustments posted in the current period relating to tax from the previous years	(0.4)	(0.4)
INCOME TAX CHARGES TO NET PROFIT	431.7	580.3

Effective tax rate	Key factors affecting the effective tax rate
2018
19.7%	the equivalent of depreciation charges financed with subsidies and grants in the amount of PLN 1.1 million, which is not taxable income, but is recognized as revenue, recognition of taxable revenue from purchased shares in the amount of PLN 17.1 million, which was not classified as accounting revenues, recognition in expenses of: a PFRON charge in the amount of PLN 25.5 million, donations granted in the amount of PLN 3.3 million and expenditures towards costs of representation in the amount of PLN 3.9 million, costs not associated with revenues of PLN 3.2 million, penalties, fines and interests on liabilities to the state budget in the amount of PLN 1.1 million, provisions of PLN 1.6 million, which are not taxable expenses. The above differences between the pre-tax profit and the taxable base constitute “permanent differences” which affect the level of the effective tax rate.
2017
18.6%	reversed provisions and losses for interest receivables on property tax of PLN 4.7 million, posted interest for the real estate tax receivables of PLN 6.5 million, which are not taxable income, recognition of the PFRON charge of PLN 23.8 million in expenses by JSW, an impairment loss and a provision for interest and enforcement costs are recognized in the amount of PLN 9.8 million but are not taxable expenses. The above differences between the pre-tax profit and the taxable base constitute “permanent differences” which affect the level of the effective tax rate.