Notes 11-15

13. Income tax expense

Recognised in the income statement

In millions of EUR 2008 2007
Current tax expense
Current year 352 359
Under/(over) provided in prior years (25) (17)
  327 342
Deferred tax expense
Origination and reversal of temporary differences 1 29
Previously unrecognised deductible temporary differences (1) (1)
Changes in tax rate (2) 4
Utilisation/(benefit) of tax losses recognised (78) (7)
Under/(over) provided in prior years 1 27
  (79) 52
Total income tax expense in the income statement 248 394

Reconciliation of the effective tax rate

In millions of EUR 2008 2007
Profit before income tax 595 1,323
Share of net profit of associates and joint ventures
and impairments thereof		 102 (54)
Profit before income tax excluding share of profit of associates
and joint ventures (inclusive impairments thereof)		 697 1,269

As from 2008, the share of profit of associates and joint ventures and impairments thereof has been excluded from the effective tax rate calculation. The dividend income from investments and gain of sale of subsidiaries and associates have been included. The comparatives have been adjusted accordingly.

  % 2008 % 2007
Income tax using the Company’s domestic tax rate 25.5 178 25.5 324
Effect of tax rates in foreign jurisdictions 2.3 16 0.4 5
Effect of non-deductible expenses 16.9 118 6.3 81
Effect of tax incentives and exempt income (9.2) (64) (1.0) (12)
Recognition of previously unrecognised temporary differences (0.1) (1) (0.2) (2)
Utilisation or recognition of previously unrecognised tax losses (0.3) (2) (0.2) (3)
Unrecognised current year tax losses 3.3 23 0.7 9
Effect of changes in tax rate (0.3) (2) 0.3 4
Withholding taxes 1.9 13 0.1 (1)
Under/(over) provided in prior years (3.4) (24) 0.8 10
Other reconciling items (1.0) (7) (1.7) (21)
  35.6 248 31.0 394

In 2008 the tax effect relating to the €275 million impairment on the goodwill of Russia has been included in non-deductible expenses. In 2007 the tax effect related to the fine of the European Union of €219 million has been included in non-deductible expenses.

Income tax relating to items (charged)/credited to equity

In millions of EUR Note 2008 2007
Changes in fair value   4 (5)
Changes in hedging reserve   57 –
  18 61 (5)