Income Tax Accounting Policy
Current tax is based on taxable profit for the year. This requires an estimation of the current tax liability together with an assessment of the temporary differences which arise as a consequence of different accounting and tax treatments.
Full provision for deferred tax is made for temporary differences between the carrying value of assets and liabilities in the consolidated financial statements and their tax bases. The amount of deferred tax reflects the expected recoverable amount and is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using the basis of taxation enacted or substantively enacted by the balance sheet date. Deferred tax assets are not recognized where it is more likely than not that the asset will not be realized in the future. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where Diageo is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance.
Tax benefits are not recognized unless it is probable that the tax positions are sustainable. Once considered to be probable, management reviews each material tax benefit to assess whether a provision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. Any interest and penalties on tax liabilities are provided for in the tax charge.
Source: Diageo PLC, Annual Report
Income Tax Expense (Benefit)
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Diageo PLC, income tax expense (benefit), continuing operations
USD $ in millions, translated from GBP £
Source: Based on data from Diageo PLC Annual Reports
| Item |
Description |
The company |
| Current tax |
The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations. |
Diageo PLC's current tax declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Deferred tax |
The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations. |
Diageo PLC's deferred tax increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
| Taxation on profit from continuing operations |
The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy. |
Diageo PLC's taxation on profit from continuing operations increased from 2009 to 2010 but then slightly declined from 2010 to 2011 not reaching 2009 level.
|
Deferred Tax Assets (Liabilities), Net
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Diageo PLC, deferred tax assets (liabilities), net
USD $ in millions, translated from GBP £
Source: Based on data from Diageo PLC Annual Reports
| Item |
Description |
The company |
| Deferred tax assets |
The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. |
Diageo PLC's deferred tax assets declined from 2009 to 2010 and from 2010 to 2011.
|
| Net deferred tax assets (liabilities) |
For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods. |
Diageo PLC's net deferred tax assets (liabilities) declined from 2009 to 2010 and from 2010 to 2011.
|
