Income taxes (Tables)

12 Months Ended

Mar. 31, 2021

The following table presents components of

Income tax expense

reported in the consolidated statements of income for the years ended March 31, 2019, 2020 and 2021.


	Millions of yen
	Year ended March 31
	2019			2020			2021
Current:
Domestic	¥	26,725		¥	42,099		¥	73,534
Foreign		8,720			10,706			17,853

Subtotal		35,445			52,805			91,387

Deferred:
Domestic		28,183			(23,512	)		(19,567	)
Foreign		(6,618	)		(399	)		(1,546	)

Subtotal		21,565			(23,911	)		(21,113	)

Total	¥	57,010		¥	28,894		¥	70,274

Effective income tax rate reflected in consolidated statements of income

For the year ended March 31, 2019, Nomura recognized

Loss before income taxes

and consequently, reconciling items shown in the table which increase

Income tax expense

are presented as negative amounts and reconciling items which reduce

Income tax expense

are presented as positive amounts.


	Year ended March 31
	2019			2020			2021
Nomura’s effective statutory tax rate		31.0	%		31.0	%		31.0	%
Impact of:
Changes in deferred tax valuation allowances		(58.3	)		(0.3	)		8.7
Additional taxable income		(2.9	)		0.6			0.7
Non-deductible expenses (1)		(110.3	)		2.9			7.1
Non-taxable income (2)		16.8			(23.5	)		(4.5	)
Dividends from foreign subsidiaries		0.0			0.1			0.0
Tax effect of undistributed earnings of foreign subsidiaries		(2.8	)		0.2			0.0
Different tax rate applicable to income (loss) of foreign subsidiaries		(19.8	)		(0.9	)		(4.0	)
Effect of changes in foreign tax laws		0.5			(0.9	)		1.1
Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates (3)		5.4			(0.1	)		(8.7	)
Other		(10.8	)		2.5			(0.9	)

Effective tax rate		(151.2	)%		11.6	%		30.5	%

(1)

Non-deductible

expenses

during the year ended March 31, 2019 includes approximately ¥21 billion relating to goodwill impairment losses (which increased Nomura’s effective tax rate by 56.3%) and approximately ¥13 billion relating to litigation provisions and settlements (which increased Nomura’s effective tax rate by 34.0%).

(2)	Non-taxable income during the year ended March 31, 2020 includes approximately ¥53 billion of the tax effect from non-taxable dividend income from affiliated Nomura companies, including deemed dividend (which decreased Nomura’s effective tax rate by 21.2%).

(3)

Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates

during the year ended March 31, 2021 of approximately ¥21 billion (which decreased Nomura’s effective tax rate by 9.1%) arises from the recognition of deferred tax assets from the decision and commitment of Nomura management to liquidate a certain wholly-owned subsidiary within Nomura in the foreseeable future. The valuation allowances of ¥3 billion have been recognized against these deferred tax assets, the impact of which are reported in

Changes in deferred tax valuation allowances

for the same period.

Details of deferred tax assets and liabilities

The following table presents the significant components of deferred tax assets and liabilities as of March 31, 2020 and 2021, before offsetting of amounts which relate to the same

tax-paying

component within a particular tax jurisdiction.


	Millions of yen
	March 31
	2020			2021
Deferred tax assets
Depreciation, amortization and valuation of fixed assets	¥	19,932		¥	22,770
Investments in subsidiaries and affiliates		1,209			20,220
Valuation of financial instruments		77,054			73,905
Accrued pension and severance costs		24,356			19,947
Other accrued expenses and provisions		51,566			60,280
Operating losses		308,504			353,326
Lease liabilities		47,680			52,251
Other		9,394			15,011

Gross deferred tax assets		539,695			617,710
Less — Valuation allowances		(388,411	)		(428,014	)

Total deferred tax assets		151,284			189,696

Deferred tax liabilities
Investments in subsidiaries and affiliates		89,630			85,636
Valuation of financial instruments		52,780			40,807
Undistributed earnings of foreign subsidiaries		2,423			2,486
Valuation of fixed assets		9,497			23,521
Right-of-use assets		47,438			51,671
Other		2,992			5,546

Total deferred tax liabilities		204,760			209,667

Net deferred tax assets (liabilities)	¥	(53,476	)	¥	(19,971	)

Changes in valuation allowance for deferred tax assets

The following table presents changes in total valuation allowances established against deferred tax assets for the years ended March 31, 2019, 2020 and 2021.


	Millions of yen
	Year ended March 31
	2019			2020			2021
Balance at beginning of year	¥	422,280		¥	444,916		¥	388,411
Net change during the year		22,636	(1)		(56,505	) (2)		39,603	(3)

Balance at end of year	¥	444,916		¥	388,411		¥	428,014

(1)

Primarily includes an increase of ¥11,843 million of valuation allowances of certain foreign subsidiaries mainly due to an increase in valuation allowances related to operating loss carryforwards, partially offset by a decrease of valuation allowances related to accrued expenses and provisions, an increase of ¥6,265 million related to Japanese subsidiaries and the Company because of an increase in valuation allowances related to operating loss carryforwards recognized in the current year, an increase of ¥14,976 million of valuation allowances related to Japanese subsidiaries and the Company as a result of changes in the expected realization of deferred tax assets, and a reduction of ¥10,448 million of valuation allowances related to expiration of operating loss carryforwards. In total, ¥22,636 million of allowances increased for the year ended March 31, 2019.

(2)

Primarily includes a reduction of ¥59,330 million of valuation allowances of certain foreign subsidiaries mainly by expiration of loss carryforwards, an increase of ¥11,462 million of valuation allowances mainly due to a decrease of valuation of financial instruments, and a reduction of ¥8,637 million related to Japanese subsidiaries and the Company mainly by utilization of loss carryforwards. In total, ¥56,505 million of allowances decreased for the year ended March 31, 2020.

(3)

Primarily includes an increase of ¥48,883

million of valuation allowances of certain foreign subsidiaries mainly due to an increase in valuation allowances related to operating loss carryforwards, a reduction of

¥5,871

million of valuation allowances mainly due to an increase in valuation of financial instruments, and a reduction of

¥3,409

million of valuation allowances related to Japanese subsidiaries and the Company mainly due to an increase of valuation of financial instruments and a decrease of accrued pension and severance costs. In total,

¥39,603

million of allowances increased for the year ended March 31, 2021.

Summarizes major jurisdictions subject to examination

The table below presents information regarding the earliest year in which Nomura remains subject to examination in the major jurisdictions in which Nomura operates as of March 31, 2021. Under Hong Kong Special Administrative Region tax law, the statute of limitation does not apply if an entity incurs taxable losses and is therefore not included in the table.


Jurisdiction	Year
Japan		2016	(1)
United Kingdom		2016
United States		2018

(1)	The earliest year in which Nomura remains subject to examination for transfer pricing issues is 2015.