Annual Report - EDP

notes to the consolidated EDP and - Energias company de Portugal, financial S.A. statementsfor the Notes years to the ended Consolidated 31 december and Company 2012 Financial and Statements 2011for the years ended 31 December 2012 and 2011The reconciliation between the nominal and the effective income tax rate for the Group, at 2012, is analysed as follows:Dec 2012Thousands of Euros Rate % Tax basis TaxNominal rate and income tax 26.5% 1,464,692 388,143Tax losses and tax credits -2.2% -122,974 -32,588Tax benefits -2.2% -119,887 -31,770Fair value of financial instruments and financial investments 0.5% 29,317 7,769Financial investments in associates and subsidiaries -5.0% -276,325 -73,226Autonomous taxation 0.4% 20,721 5,491State surcharge 2.5% 139,970 37,092Other adjustments, tax differencial and changes in estimates -1.2% -69,336 -18,374Effective tax rate and total income tax 19.3% 1,066,178 282,537Law 12-A/2010 issued on 30 June 2010, approved a group of additional measures aimed at the consolidation of public finances in line with the Stability and GrowthPact (PEC), namely the introduction of a State surcharge, corresponding to 2.5% of the taxable income exceeding 2 millions of Euros. Consequently, the total incometax rate applicable in Portugal to the entities with taxable income exceeding that amount, was increased to 29%.The Law 64-A/2011 of 30 December, modified the above referred tax, where the state surcharge applies (i) at a rate of 3% over taxable income in the range of 1.5 to 10millions of Euros, and (ii) at a rate of 5% over taxable income exceeding 10 millions of Euros. The Law 66-B/2012 of 31 December aggravated the state surcharge asfollows: (i) at a rate of 3% over taxable income in the range of 1.5 to 7.5 millions of Euros, and (ii) at a rate of 5% over taxable income exceeding 7.5 millions of Euros. Inaccordance with n.º 4 of Article 116º of the Law 64-B/2011, such modification applies for a two year period starting in 1 January 2012. Accordingly, during 2012 and2013, the corporate income tax rate in Portugal applicable to entities with taxable income exceeding 7.5 millions of Euros will be 31,5%.The reconciliation between the nominal and the effective income tax rate for the Group, at 2011, is analysed as follows:Dec 2011Thousands of Euros Rate Tax basis TaxNominal rate and income tax 26.5% 1,592,357 421,975Tax losses and tax credits -6.9% -413,072 -109,464Tax benefits -3.9% -232,026 -61,487Differences between tax and accounting gains and losses -1.4% -84,472 -22,385Fair value of financial instruments and financial investments 0.5% 31,883 8,449Financial investments in associates and subsidiaries -0.3% -18,045 -4,782Autonomous taxation 0.2% 14,868 3,940State surcharge 1.0% 62,585 16,585Other adjustments, tax differencial and changes in estimates 0.7% 28,483 7,547Effective tax rate and total income tax 16.4% 982,561 260,378The reconciliation between the nominal and the effective income tax rate for the Company, at 2012, is analysed as follows:Dec 2012Thousands of Euros Rate % Tax basis TaxNominal rate and income tax 26.5% 741,326 196,451Non deductible provisions and amortisations for tax purposes 2.8% 79,328 21,022Tax losses and tax credits -6.8% -190,177 -50,397Dividends -24.2% -677,947 -179,656Difference between tax and accounting gains/losses-3.6% -100,457 -26,621State surcharge2.6% 73,389 19,448Financial investments in associates and subsidiaries-9.1% -255,181 -67,623Other adjustments and changes in estimates -0.5% -15,020 -3,980Effective tax rate and total income tax -12.3% -344,739 -91,356Financial investments in subsidiaries and associated companies includes the effect of the reversal of a deferred tax liability which was accounted for following the saleof the shareholding in Oni, by virtue of the extinction of the facts which gave rise to its constitution on the transaction date.The reconciliation between the nominal and the effective income tax rate for the Company, at 2011, is analysed as follows:Dec 2011Thousands of Euros Rate % Tax basis TaxNominal rate and income tax 26.5% 612,198 162,232Non deductible provisions and amortisations for tax purposes 1.2% 28,642 7,590Tax losses and tax credits -16.8% -387,592 -102,712Dividends -29.4% -678,049 -179,683Difference between tax and accounting gains/losses -14.0% -323,004 -85,596State surcharge3.6% 84,109 22,289Other adjustments and changes in estimates 0.5% 8,581 2,274Effective tax rate and total income tax -28.4% -655,115 -173,606202A World Full Of Energy