Income taxes (Tables)

12 Months Ended

Mar. 31, 2013

Components of income tax expense

The components of income tax expense reflected in the consolidated statements of income are as follows.

	Millions of yen
	Year ended March 31
	2011			2012		2013
Current:
Domestic	¥	175		¥	13,481	¥	71,918
Foreign		5,956			7,650		6,164
Subtotal		6,131			21,131		78,082
Deferred:
Domestic		56,194			34,274		55,257
Foreign		(995	)		3,498		(1,300	)
Subtotal		55,199			37,772		53,957
Total	¥	61,330		¥	58,903	¥	132,039

Effective income tax rate reflected in consolidated statements of income

The following table presents a reconciliation of the effective income tax rate reflected in the consolidated statements of income to Nomura’s effective statutory tax rate for the years ended March 31, 2011, 2012 and 2013.

	Year ended March 31
	2011			2012			2013
Our effective statutory tax rate		41.0	%		41.0	%		38.0	%
Impact of:
Changes in deferred tax valuation allowance		1.6			(22.5	)		(0.7	)
Taxable items to be added on financial profit		5.3			3.8			1.5
Non-deductible expenses		16.6			23.3			12.9
Non-taxable revenue		(8.4	)		(29.7	)		(9.3	)
Dividends from foreign subsidiaries		0.0			0.9			0.2
Tax effect of undistributed earnings of foreign subsidiaries		(0.0	)		(1.1	)		0.2
Different tax rate applicable to income (loss) of foreign subsidiaries		10.8			14.1			10.0
Effect of changes in domestic tax laws		—			45.7			0.9
Expiration of loss carryforwards		1.3			2.8			1.3
Tax benefit recognized on the devaluation of investment in subsidiaries and affiliates		(1.3	)		(8.8	)		—
Other		(1.1	)		(0.2	)		0.5
Effective tax rate		65.8	%		69.3	%		55.5	%

Details of deferred tax assets and liabilities

Details of deferred tax assets and liabilities are as follows.

	Millions of yen
	March 31
	2012			2013
Deferred tax assets
Depreciation, amortization and valuation of fixed assets	¥	70,406		¥	10,043
Investments in subsidiaries and affiliates		177,522			177,175
Valuation of financial instruments		197,961			146,800
Accrued pension and severance costs		34,291			17,999
Other accrued expenses and provisions		84,628			106,436
Operating losses		313,245			341,177
Other		20,034			5,228
Gross deferred tax assets		898,087			804,858
Less—Valuation allowance		(490,986	)		(522,220	)
Total deferred tax assets		407,101			282,638
Deferred tax liabilities
Investments in subsidiaries and affiliates		78,262			88,631
Valuation of financial instruments		56,732			53,367
Undistributed earnings of foreign subsidiaries		3,167			2,960
Valuation of fixed assets		117,112			21,950
Other		14,077			4,210
Total deferred tax liabilities		269,350			171,118
Net deferred tax assets	¥	137,751		¥	111,520

Changes in valuation allowance for deferred tax assets

The allowances against deferred tax assets are determined based on a review of future realizable value. Changes in the valuation allowance for deferred tax assets are shown below.

	Millions of yen
	Year ended March 31
	2011			2012			2013
Balance at beginning of year	¥	501,554		¥	461,966		¥	490,986
Net change during the year		(39,588	)(1)		29,020	(2)		31,234	(3)
Balance at end of year	¥	461,966		¥	490,986		¥	522,220

(1) Includes negative ¥33,523 million related to foreign subsidiaries which is mainly due to an effect of utilized loss carryforwards in certain U.S. subsidiaries, negative ¥2,657 million and negative ¥3,408 million related to Japanese subsidiaries and the Company, respectively, which is due mainly to a result of a review of future realizable value for the deferred tax assets previously recorded. In total, ¥39,588 million of allowances decreased for the year ended March 31, 2011.

(2) Includes ¥24,715 million related to foreign subsidiaries which is mainly due to an increase in non-recoverability of losses in certain foreign subsidiaries, ¥20,014 million related to Japanese subsidiaries which is mainly due to the effect of the conversion of Nomura Land and Building Co., Ltd. into a subsidiary of Nomura Holdings, Inc., and negative ¥15,709 million related to the Company which is due mainly to the decrease of allowance for the deferred tax assets previously recorded. In total, ¥29,020 million of allowances increased for the year ended March 31, 2012.

(3) Includes ¥52,862 million related to foreign subsidiaries which is mainly due to an increase in non-recoverability of losses in certain foreign subsidiaries, negative ¥22,903 million related to the de-consolidation of Nomura Real Estate Holdings into an equity method affiliate, and ¥1,275 million related to Japanese subsidiaries and the Company, which is determined based on a review of future realizable value. In total, ¥31,234 million of allowances increased for the year ended March 31, 2013.

Summarizes major jurisdictions subject to examination

Under Hong Kong Special Administrative Region (“Hong Kong”) tax law, the statute of limitation does not apply if the entity records a tax loss, thus not stated in below table.

Jurisdiction	Year
Japan		2008	(1)
U.K.		2012
U.S.		2009

(1) For transfer pricing, the earliest year in which Nomura remains subject to examinations is 2007.