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13. Income tax

(i) Income tax expense

for the year ended
31 December 2013 31 December 2012
Current tax expense 63,387 61,099
Change in deferred tax 285 35,980
Correction of income tax returns of previous years 3,704 270
Income tax expense in the income statement 67,376 97,349
for the year ended
31 December 2013 31 December 2012
Tax losses carried forward 5,304 7,307
Receivables and other assets 6,298 22,223
Liabilities (14,100) 23,642
Hedge valuation (91) (322)
Deferred distribution fees 1,403 (412)
Other property, plant and equipment and intangible assets (815) (19,284)
Programming assets 2,286 2,826
Change in deferred tax recognized in income statement – total 285 35,980

(ii) Income tax recognized in the statement of other comprehensive income

for the year ended
31 December 2013 31 December 2012
Change in deferred income tax on hedge valuation 2,737 (5,955)
Change in deferred income tax recognized on currency translation adjustment – foreign operations (1,010) (155)
Income tax expense recognized in other comprehensive income – total 1,727 (6,110)

(iii) Effective tax rate reconciliation

for the year ended
31 December 2013 31 December 2012
Gross profit 592,821 695,647
Income tax at applicable statutory tax rate of 19% 112,636 132,173
Tax amortization of intangible assets (19,806) (29,165)
Effect of tax rates in foreign jurisdictions (*) (1,045) 107
Gain on disposal of subsidiary (7,163) -
Technology tax relief (4,520) -
Deferred tax unrecognized in previous periods (10,802) (3,462)
Other non-taxable revenue and non-tax deductible costs, net, at 19% tax rate (1,924) (2,304)
Tax expense for the year 67,376 97,349
Effective tax rate 11,4% 14,0%

(*) The Group’s entities measure current and deferred income tax applying tax rates enacted in countries in which they are domiciled:
- 9.56% for entities domiciled in Switzerland,
- 19% for entities domiciled in the Republic of Poland,
- 26% in 2012 and 22% in 2013 for entities domiciled in Sweden,
- 26% in the period of January – March 2012 and 24% in the period of April – December 2013 for entities domiciled in the United Kingdom,
- 28% for entities domiciled in Norway.

(iv) Deferred tax assets

31 December 2013 31 December 2012
Tax losses carried forward 16,042 19,779
Liabilities 63,353 50,036
Hedge valuation 2,298 5,035
Tangible assets 21,965 21,052
Programming assets 1,496 981
Receivables and other assets 15,571 26,558
Total deferred tax assets 120,725 123,441
Set off of deferred tax assets and liabilities (81,871) (92,085)
Deferred tax assets in the balance sheet 38,854 31,356

(v) Tax loss

31 December 2013 31 December 2012
2013 tax loss carried forward 6,889 -
2012 tax loss carried forward 31,027 31,027
2011 tax loss carried forward 58,484 122,240
2010 tax loss carried forward 47,692 52,978
2009 tax loss carried forward 20,057 37,830
2007 tax loss carried forward - 15,999
Tax losses carried forward – total 164,149 260,074

(vi) Tax losses recognized

31 December 2013 31 December 2012
2013 tax loss carried forward 5,328 -
2012 tax loss carried forward 21,312 11,553
2011 tax loss carried forward 36,522 91,631
2010 tax loss carried forward 8,454 -
2009 tax loss carried forward 13,656 -
Tax losses carried forward – total 85,272 103,184

As at 31 December 2013 the Group recognized deferred tax asset on tax losses to the extent that it was probable that they would be utilised in the future.

According to Art. 7 of the Polish Corporate Income Tax Act dated 15 February 1992, tax losses incurred in a given financial year can be utilised in the subsequent five fiscal years. However, no more than 50% of a tax loss for any given year can be utilised in a single subsequent fiscal year.

(vii) Deferred tax liabilities

31 December 2013 31 December 2012
Receivables and other assets 63,029 67,761
Hedge valuation - 91
Liabilities 392 3,517
Deferred distribution fees 18,925 17,522
Tangible and intangible assets 99,748 91,906
Programming assets 7,843 5,546
Total deferred tax liabilities 189,937 186,343
Set off of deferred tax assets and liabilities (81,871) (92,085)
Deferred tax liabilities in the balance sheet 108,066 94,258