19. Income Taxes1. The Company and its consolidated subsidiaries are subject to a number of taxes based on income which, in the aggregate, resulted in a statutory tax rate of approximately 33.06% and 35.64% for the years ended March 31, 2016 and 2015, respectively. Income taxes of the foreign consolidated subsidiaries are based generally on-the tax rates applicable in their countries of incorporation. The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2016 and 2015 differ from the statutory tax rate for the following reasons:20162015Statutory tax rate33.06%35.64%Effect of:Permanently non-deductible expenses for income tax purposes such as entertainment expenses0.400.39Permanently non-taxable income for income tax purposes such as dividend income(10.49)(10.66)Municipal Tax0.340.31The difference of tax rates applied to foreign subsidiaries(8.77)(7.36)Tax deduction in accordance with special tax measures(2.93)(2.38)Decrease of valuation allowance for such as net operating loss carryforward5.522.05Consolidating adjustment of dividend income from consolidated subsidiaries13.9510.95Effect of revised corporate tax rate1.53 2.83Other, net3.281.83Effective tax rate35.89%33.60%2. The significant components of deferred tax assets and liabilities as of March 31, 2016 and 2015 were as follows: Millions of yen Thousands ofU.S. dollars201620152016Deferred tax assets:Accrued bonuses¥   698¥   740 $  6,201Accrued enterprise taxes1351821,205Operating loss carryforwards7204136,390Net defined benefit liability3,4622,42130,726Retirement benefit trust1,3481,61611,970Research and development cost4974984,415Loss on valuation of inventories2692462,393Allowance for doubtful accounts1211021,082Unrealized gain3714353,300Excess depreciation expense3852993,422Other5756135,107 Gross deferred tax assets8,5877,57076,215Valuation allowance(912)(406)(8,096)7,6757,16368,118Deferred tax liabilities:Revaluation of fixed assets in accordance with special tax measures(192)(208)(1,708)Net unrealized holding gain on securities(253)(325)(2,249)Depreciation expense of subsidiaries(211)(274)(1,873)Dividend income from consolidated subsidiaries(846)(435)(7,515)Net defined benefit asset―(595)―Other(97)(62)(865)(1,601)(1,902)(14,211) Net deferred tax assets¥ 6,074¥ 5,260$ 53,906Note: The net deferred tax assets as of March 31, 2016 and 2015 were included in the following items on the consolidated balance sheets: Millions of yen Thousands ofU.S. dollars201620152016Current assets-Deferred tax assets¥1,121¥1,879 $ 9,949Noncurrent assets-Deferred tax assets4,9783,57844,179Current liabilities-Other1417128Noncurrent liabilities-Other101789463LINTEC ANNUAL REPORT 2016


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