Note 8 — Deferred Taxes
The amount of unused tax losses for which no deferred tax assets are recognized in the consolidated statements of financial position as of December 31, 2017, 2016 and 2015 was $41,632, $542,357 and $935,866, respectively, with no expiration date limitation.
Deferred tax is calculated in full on temporary differences using a tax rate of 24%, 24% and 27.5% for the years ended December 31, 2017, 2016 and 2015, respectively, if the temporary difference is subject only to IRES (an Italian corporate income tax) rules, or 27.9%, 27.9% and 31.4% for the years ended December 31, 2017, 2016 and 2015, respectively, if the temporary difference is subject both to IRES and IRAP (an Italian regional production tax) rules.
The new Italian legislation amended the IRES rates from 27.5% to 24% in 2017 to be used for the income tax calculation of accounting periods ending in the year 2017 and 2016.
The movement on the deferred tax account is as shown below:
| 2017 | 2016 | 2015 | ||||||||||
| At January 1 | $ | (2,557,571 | ) | $ | (2,764,734 | ) | $ | (3,738,082 | ) | |||
| Recognized directly in equity | ||||||||||||
| Sale of SIM (see note 9 — Discontinued Operations) | – | – | 315,325 | |||||||||
| Sale of Nova (see note 9 — Discontinued Operations) | 206,679 | – | – | |||||||||
| Currency exchange difference | (383,555 | ) | 71,026 | 370,358 | ||||||||
| Recognized in profit and loss | ||||||||||||
| Deferred tax benefit/(expense) | (15,867) | 136,137 | 287,665 | |||||||||
| At December 31, | $ | (2,750,314 | ) | $ | (2,557,571 | ) | $ | (2,764,734 | ) | |||
Details of the deferred tax liability and amounts recognized in net income/(loss) are as follows:
| 2017 | 2017 | 2017 | 2017 | |||||||||||||
| Asset | Liability | (Charged)
/ Net | Movement | |||||||||||||
| Adjustment for IFRS purposes (deductible/taxable for local tax rules in future fiscal years) | ||||||||||||||||
| Writing off of intangibles | $ | 507,880 | $ | – | $ | 507,880 | $ | 59,767 | ||||||||
| Writing off of tangibles | – | (48,009 | ) | (48,009 | ) | 11,164 | ||||||||||
| Accounting of lease contracts according to IAS 17 | – | (1,997,805 | ) | (1,997,805 | ) | 191,956 | ||||||||||
| Accounting of investment properties according to fair value | – | (948,648 | ) | (948,648 | ) | (225,124 | ) | |||||||||
| Loss on investments (internal restructuring) | – | (263,732 | ) | (263,732 | ) | – | ||||||||||
| Other temporary differences | ||||||||||||||||
| Bad debt provision | – | – | – | 2,780 | ||||||||||||
| Others | – | – | – | (24,676 | ) | |||||||||||
| Total | $ | 507,880 | $ | (3,258,194 | ) | $ | (2,750,314 | ) | $ | 15,867 | ||||||
| 2016 | 2016 | 2016 | 2016* | |||||||||||||
| Asset | Liabilities | (Charged) / Net |
Movement | |||||||||||||
| Adjustment for IFRS purposes (deductible/taxable for local tax rules in future fiscal years) | ||||||||||||||||
| Writing off of intangibles | $ | 501,880 | $ | – | $ | 501,880 | $ | 97,213 | ||||||||
| Writing off of tangibles | – | (149,164 | ) | (149,164 | ) | 8,424 | ||||||||||
| Accounting of lease contracts according to IAS 17 | – | (1,574,288 | ) | (1,574,289 | ) | 14,091 | ||||||||||
| Accounting of investment properties according to fair value | – | (1,107,110 | ) | (1,107,110 | ) | (272,437 | ) | |||||||||
| Mark to market on derivative instruments | – | – | – | 53,034 | ||||||||||||
| Loss on investments (internal restructuring) | – | (231,484 | ) | (231,484 | ) | (30,470 | ) | |||||||||
| Other temporary differences | ||||||||||||||||
| Bad debt provision | 2,596 | – | 2,596 | 397 | ||||||||||||
| Provision for risk | – | – | – | 217 | ||||||||||||
| Others | – | – | – | (775 | ) | |||||||||||
| Total | $ | 504,476 | $ | (3,062,046 | ) | $ | (2,557,571 | ) | $ | (130,306 | ) | |||||
| 2015 | 2015 | 2015 | 2015* | |||||||||||||
| Asset | Liabilities | (Charged) / Net | Movement | |||||||||||||
| Adjustment for IFRS purposes (deductible/taxable for local tax rules in future fiscal years) | ||||||||||||||||
| Writing off of intangibles | $ | 611,712 | $ | – | $ | 611,712 | $ | 48,844 | ||||||||
| Writing off of tangibles | – | (120,387 | ) | (120,387 | ) | 12,234 | ||||||||||
| Accounting of lease contracts according to IAS 17 | – | (1,606,270 | ) | (1,606,270 | ) | 253,125 | ||||||||||
| Accounting of investment properties according to fair value | – | (1,436,973 | ) | (1,436,973 | ) | (481,360 | ) | |||||||||
| Mark to market on derivative instruments | 52,013 | – | 52,013 | 10,537 | ||||||||||||
| Loss on investments (internal restructuring) | – | (268,103 | ) | (268,103 | ) | 273,955 | ||||||||||
| Other temporary differences | ||||||||||||||||
| Bad debt provision | 3,061 | – | 3,061 | 5,538 | ||||||||||||
| Others | 213 | – | 213 | (487 | ) | |||||||||||
| Total | $ | 666,999 | $ | (3,431,733 | ) | $ | (2,764,734 | ) | $ | (122,386 | ) | |||||
*Restated for discontinued operations (see note 9 — Discontinued Operations)