Cellcom Israel Ltd. | CIK:0001385145 |

Note 28 - Income Tax

A.	Details regarding the tax environment of the Group

Corporate tax rate

Presented hereunder are the tax rates relevant to the Group in the years 2015-2017:

2015 - 26.5%

2016 - 25%

2017 - 24%

On January 4, 2016 the Israeli Parliament passed the Law for the Amendment of the Income Tax Ordinance (Amendment 216) - 2016, by which, inter alia, the corporate tax rate was reduced by 1.5% to a rate of 25% as from January 1, 2016.

Furthermore, on December 22, 2016 the Israeli Parliament passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) - 2016, by which, inter alia, the corporate tax rate was reduced from 25% to 23% in two steps. The first step to a rate of 24% as from January 2017 and the second step to a rate of 23% as from January 2018.

As a result of the aforesaid, the deferred tax balances as at December 31, 2017 were calculated according to the new tax rate of 23% - the tax rate expected to apply on the date of reversal.

Current taxes for the reported periods are calculated according to the tax rates presented above.

 

B.	Composition of income tax expense (income)

		Year ended December 31,
		2015				2016				2017
		NIS millions				NIS millions				NIS millions
Current tax expense (income)
Current year			45				35				27
Adjustments for prior years, net			-				(27	)			(1	)
			45				8				26
Deferred tax expense (income)
Creation and reversal of temporary differences			(9	)			21				14
Change in tax rate			-				(19	)			-
			(9	)			2				14
Income tax expense			36				10				40

 

C.	Income tax in respect of other comprehensive income (loss)

		Year ended December 31,
		2015				2016				2017
		NIS millions				NIS millions				NIS millions
Before tax			(2	)			1				1
Tax (benefit) expenses			1				(1	)			-
Net of tax			(1	)			-				1

D.	Reconciliation between the theoretical tax on the pre-tax profit and the tax expense

 

		Year ended December 31,
		2015				2016				2017
		NIS millions				NIS millions				NIS millions
Profit before taxes on income			133				160				153
Primary tax rate of the Group			26.5	%			25.0	%			24.0	%
Tax calculated according to the Group’s primary tax rate			35				40				37
Additional tax (tax saving) in respect of:
Non-deductible expenses			5				4				5
Taxes in respect of previous years			-				(27	)			(1	)
Effect of change in tax rate			-				(19	)			-
Tax exempt income			(1	)			-				-
Other differences			(3	)			12				(1	)
Income tax expenses			36				10				40

 

E.	Deferred tax assets and liabilities

(1)

Recognized deferred tax assets and liabilities

Deferred taxes are calculated according to the tax rate anticipated to be in effect on the date of reversal as stated above.

The movement in deferred tax assets and liabilities is attributable to the following items:

		Allowance for doubtful debts				Property, plant and equipment and intangible assets				Other				Total
		NIS millions				NIS millions				NIS millions				NIS millions
Balance of deferred tax asset (liability) as at January 1, 2017			43				(184	)			24				(117	)
Changes recognized in profit or loss			-				(13	)			(1	)			(14	)
Balance of deferred tax asset (liability) as at December 31, 2017			43				(197	)			23				(131	)
Deferred tax asset			43				5				26				74
Offset of balances															(74	)
Deferred tax asset in the consolidated statements of financial position as at December 31, 2017															-
Deferred tax liability			-				(202	)			(3	)			(205	)
Offset of balances															74
Deferred tax liability in the consolidated statements of financial position as at December 31, 2017															(131	)