Note 16. Current and deferred taxes

Tax on this year’s net income and other taxes
Consolidated
SEK millions	2023	2022
Major components of the Group’s tax cost:
Current tax cost	-2,119	-1,579
Adjustment for current taxes on prior periods	-63	120
Deferred tax costs/income on changes in temporary differences	-50	-138
Deferred tax costs/income on changes in tax rates or new taxes	-4	1
Previously unrecognised tax assets related to tax losses and tax credits	4	20
Previously unrecognised deferred tax assets related to tax losses, tax credits and temporary differences	4	1
Deferred tax cost from the write down or reversal of a previous write down of a deferred tax asset	8	1
Dividend distribution tax	0	0
Other taxes	-49	-36
Total tax cost	-2,269	-1,610

Other taxes are mainly referring to wealth tax.

Tax on this year’s other comprehensive income
Consolidated
SEK millions	2023	2022
Major components of the Group’s tax cost
Deferred tax on:
Cash flow hedges	-9	69
Market valuation of external shares	1	-28
Translation difference	-23	142
Revaluations of defined benefit obligations	23	-81
Total tax cost	-8	102

The difference between the tax costs of the group and the tax cost based upon applicable tax rates can be explained as follows:

Tax cost reconciliation
Consolidated
SEK millions	2023	2022
Result after financial items	8,650	6,179
Tax according to applicable tax rates	-2,053	-1,454
Tax effect of:
Non-deductible costs	-530	-352
Non-taxable income	98	183
Differences between reported official depreciation and depreciation according to tax rules	11	6
Differences between reported other official appropriations and other appropriations according to tax rules	256	-55
Tax losses and tax credits	61	-22
Adjustment for current tax on prior periods	-63	120
Adjustment deferred tax	0	0
Dividend distribution tax	0	0
Other	-49	-36
Total tax costs	-2,269	-1,610

Alfa Laval has provisions for uncertain tax positions and they are booked as a part of current tax liabilities when for instance a local tax audit or a taxation decision indicate an increased tax burden and the company makes the judgement that the tax authority wholly or partially can gain success in the future litigation.

Temporary differences exist when there is a difference between the book value and the tax base of assets and liabilities. The Group’s temporary differences have resulted in a deferred tax asset or a deferred tax liability relating to the following assets and liabilities:

Deferred tax assets and liabilities
Consolidated
	2023		2022
SEK millions	Assets	Liabilities	Assets	Liabilities
Relating to:
Intangible non-current assets	1	1,257	9	1,362
Tangible non-current assets	95	155	121	188
Right-of-use assets	22	141	–	–
Inventory	211	121	212	56
Other current assets	3	9	4	11
Financial assets	1	9	43	11
Short term liabilities	1,348	50	1,520	83
Lessee liability	140	–	–	–
Tax losses and tax credits *	93	–	130	–
Other	17	841	21	747
Subtotal	1,931	2,583	2,060	2,458
Possible to net	-211	-211	-165	-165
Total deferred taxes	1,720	2,372	1,895	2,293

* The Group has reported a deferred tax asset on unused tax losses and tax grants of SEK 534 (665) million. These unused tax losses and tax grants are essentially not restricted in time.

In the Group there are temporary differences and unused tax losses and tax credits of SEK 761 (999) million that have not resulted in corresponding deferred tax assets, since these are not likely to be used within foreseeable time. The temporary differences are mainly relating to pensions, where the date of payment is so far into the future that considering discounting and uncertainty concerning future profit levels no asset is deemed to exist. The unused tax losses and tax grants are essentially not restricted in time, but the tax losses that can be utilised per year can be restricted to a certain proportion of the taxable result.

The nominal tax rate has changed in the following countries between 2022 and 2023 or will change during 2024.

Tax rates by country
Consolidated
Percent	2024	2023	2022
Argentina	35.0	35.0	30.0
Lithuania	15.0	15.0	20.0
UK	25.0	25.0	19.0
South Africa	27.0	27.0	28.0
Czech Republic	21.0	19.0	19.0
Turkey	25.0	25.0	23.0
Austria	23.0	24.0	25.0

The tax rates for 2023 and 2022 have been used to calculate the actual tax each year, while the tax rates for 2024 and 2023 have been used to calculate the deferred tax for 2023 and 2022 respectively.

The Group’s normal effective tax rate is approximately 26 (26) percent based on taxable result, and it is calculated as a weighted average based on each subsidiary’s part of the result before tax. One-time items can however increase or decrease the tax rate for an individual year.

Tax cost per country/district
Consolidated
	2023				2022
SEK millions (unless otherwise stated)	Earnings before tax and received dividends	Tax cost	Tax percentage (%)	Earnings before tax and received dividends	Tax cost	Tax percentage (%)
Top ten countries/districts
China	1,840	-499	27.1%	1,584	-388	24.5%
Sweden	1,468	-442	30.1%	1,517	-363	23.9%
Norway	1,210	-258	21.3%	746	-78	10.5%
USA	781	-175	22.3%	692	-155	22.4%
India	585	-154	26.3%	388	-101	26.1%
Denmark	704	-152	21.7%	432	-88	20.4%
Brazil	430	-122	28.5%	339	-107	31.5%
Italy	205	-65	31.6%	-104	11	10.9%
Hong Kong	238	-63	26.5%	90	-38	42.3%
Belgium	148	-54	36.4%	1,198	-13	1.1%
Total top ten countries/districts	7,609	-1,984	26.1%	6,882	-1,320	19.2%
Other countries/districts
With a positive result	1,314	-314	23.9%	1,648	-363	22.0%
With losses	-188	-32	-17.2%	-75	2	2.1%
Total all countries/districts	8,735	-2,330	26.7%	8,455	-1,681	19.9%
Consolidation entries
Elimination of appropriations	104	-17	16.3%	-479	97	20.3%
Amortisation of step-up values	-965	216	22.4%	-943	211	22.4%
Central provisions and consolidation adjustments	776	-138	17.8%	-854	-237	-27.8%
Total	8,650	-2,269	26.2%	6,179	-1,610	26.1%

The above table presents the earnings before tax and received dividends, the tax cost and the tax percentage per country for the top ten countries/districts separately and the others grouped under profit generating and loss-making respectively and the consolidation entries in order to arrive at the total. The local results include appropriations. The reason why the result is before received dividends is that these mostly are non-taxable. The top ten countries/districts are defined as the ten countries/districts with the highest tax cost in 2023. The comparison figures 2022 are for these ten countries/districts, although they might not have been among the ten countries/districts with highest tax cost also in 2022.

Observe that individual companies in the top ten countries/districts and in the group with a positive result can report losses. The group with losses can contain individual companies with profits. Also observe that the presented result is without correction for any non-deductible costs and non-taxable revenues outside received tax free dividends.

Companies with losses in countries/districts without tax pooling might have unused tax losses that have not resulted in a corresponding deferred tax asset, since these are not likely to be used. The lack of such a deferred tax income in these cases has an impact on the tax percentage in the concerned countries/districts.