Income taxes

Effective income tax rate reflected in consolidated statements of income


	Year ended March 31
	2015			2016			2017
Nomura’s effective statutory tax rate		36.0	%		33.0	%		31.0	%
Impact of:
Changes in deferred tax valuation allowance		5.1			36.1			(10.8	)
Additional taxable revenues		0.3			0.3			0.1
Non-deductible expenses		5.9			7.8			2.9
Non-taxable revenue		(4.7	)		(7.2	)		(2.6	)
Dividends from foreign subsidiaries		0.0			0.0			0.0
Tax effect of undistributed earnings of foreign subsidiaries		0.0			0.1			0.0
Different tax rate applicable to income (loss) of foreign subsidiaries		(1.4	)		1.1			0.3
Effect of changes in domestic tax laws		(1.4	)		(0.9	)		1.0
Expiration of loss carryforwards		0.0			—			—
Tax benefit recognized on the devaluation of investment in subsidiaries and affiliates⁽¹⁾		—			(54.8	)		1.7
Other		(5.0	)		(1.8	)		1.3

Effective tax rate		34.8	%		13.7	%		24.9	%

(1)

The tax benefit recognized on the devaluation of investment in subsidiaries and affiliates during the year ended March 31, 2016 of approximately ¥90 billion (which impacts Nomura’s effective statutory tax rate by 54.8%) arises from the recognition of deferred tax assets from the decision of Nomura management to liquidate certain wholly-owned subsidiaries within Nomura during the year. Total valuation allowances of ¥24 billion have been recognized against these deferred tax assets, the impact of which are reported in changes in deferred tax valuation allowance for the same period.

Changes in valuation allowance for deferred tax assets


	Millions of yen
	Year ended March 31
	2015			2016			2017
Balance at beginning of year	¥	490,603		¥	565,103		¥	543,489
Net change during the year		74,500	⁽¹⁾		(21,614	)⁽²⁾		(23,997	)⁽³⁾

Balance at end of year	¥	565,103		¥	543,489		¥	519,492

(1)

Primarily includes ¥85,403 million of additional full valuation allowances established by certain foreign subsidiaries against additional operating loss carryforwards generated during the period as a result of additional taxable losses being incurred by such subsidiaries, offset by a reduction of ¥2,921 million of valuation allowances of certain foreign subsidiaries and a reduction of ¥7,982 million related to Japanese subsidiaries and the Company because of decrease in valuation allowances related to operating loss carryforwards due to the effect of changes in domestic tax laws. In total, ¥74,500 million of allowances increased for the year ended March 31, 2015.

(2)

Primarily includes ¥7,003 million of additional full valuation allowances established by certain foreign subsidiaries against additional operating loss carryforwards generated during the period as a result of additional taxable losses being incurred by such subsidiaries, offset by a reduction of ¥27,757 million of valuation allowances of certain foreign subsidiaries and a reduction of ¥860 million related to Japanese subsidiaries and the Company because of decrease in valuation allowances related to operating loss carryforwards due to the effect of changes in domestic tax laws. In total, ¥21,614 million of allowances decreased for the year ended March 31, 2016.

(3)

Primarily includes an increase of ¥2,040 million of valuation allowances of certain foreign subsidiaries partly because of changes in the expected realization of deferred tax assets, a reduction of ¥35,214 million of valuation allowances of certain foreign subsidiaries mainly by utilization of operating loss carryforwards, an increase of ¥5,811 million of valuation allowances related to Japanese subsidiaries and the Company by changes in the expected realization of deferred tax assets, and an increase of ¥3,366 million related to Japanese subsidiaries and the Company because of increase in valuation allowances related to operating loss carryforwards due to the effect of changes in domestic tax laws. In total, ¥23,997 million of allowances decreased for the year ended March 31, 2017.