Accounting policy
Current income tax
Current income tax assets and liabilities are measured at the amount that is expected to be paid to or recovered
from the tax authorities. The current and deferred income tax is calculated based on tax rates and tax laws that
have been enacted or substantively enacted, in the countries where the Group operates and generates taxable
income. Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax assets and deferred tax liabilities are calculated on all differences between the book value and
tax value of assets and liabilities. Deferred tax assets and deferred tax liabilities are recognised at their nominal
value and classified as non-current liabilities and non-current assets in the balance sheet. Deferred tax liabilities
and deferred tax assets are offset as far as possible as permitted by taxation legislation and regulations.
Deferred tax assets are recognised for all unused tax losses and temporary differences to the extent that it is
probable that taxable profit will be available against which losses and temporary differences can be utilised.
Estimate and judgement
Uncertainties exist with respect to determining the Group’s deferred tax assets and deferred tax liabilities.
Significant management judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and level of future taxable profits, together with future tax planning
strategies.
Jotun’s widespread business operations expose us to several tax regimes and their interaction. Tax authorities
in different jurisdictions may challenge the calculation of taxes payable from prior periods, which results
in changes to income tax expense in the period of change, as well as interest and penalties. Management
evaluates, among other factors, the degree of probability of an unfavourable outcome and the ability to make
a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the
Group to accrue for a matter that has not been previously accrued for because it was not considered probable.
Jotun is involved in several tax disputes with tax authorities, of which the outcomes are subject to significant
uncertainties.
In 2021 Jotun A/S received a notification from the Norwegian tax authorities for the years 2017 to 2020 related
to taxation of dividends received from our companies in Saudi Arabia. Over the years Jotun A/S has reported
the dividends from Saudi Arabia as free of tax in accordance with the Norwegian participation exemption
model. The authorities consider Saudi Arabia being a low tax jurisdiction, consequently the dividends should
be taxed in Norway. Jotun has disputed the notification. Supported by external legal advice, the Management
considers Jotun A/S has a strong case, and no provision has been made in the consolidated financial
statements.
Income tax expense (NOK million)
Effective tax rate based on profit before tax
439
2017
442
529
Back to contents >
780 779
2018 2019 2020 2021
35 %
40 %
25 % 25 %
27 %
Jotun Group
Jotun Annual Report 2021 I 39