INCOME TAX	9 Months Ended
Sep. 30, 2013
INCOME TAX
INCOME TAX	9. INCOME TAX The Company is subject to US (domestic), Russian and Kazakh income taxes, based on US legislation, Russian tax legislation, Kazakh legislation and the Double Tax Treaty of 1992 between the United States and Russia (the "Treaty"). The Company's Russia- and Kazakhstan-based subsidiaries are subject to Russian and Kazakh income tax. The statutory income tax rate in Russia and Kazakhstan in 2012 and for the nine months ended September 30, 2013 was 20%. US taxable income or losses recorded are reported on CTC Media, Inc.'s US income tax return. CTC Media, Inc.'s taxable revenues consist predominantly of dividends paid by its Russian subsidiaries and interest on deposits. Dividends distributed to CTC Media, Inc. are subject to Russian withholding tax of 5% under the Treaty. Dividends distributed within Russia are subject to a withholding tax of 9% in case of ownership of less than 50%. Effective January 1, 2007, the Company elected to claim foreign tax credits in respect of Russian taxes paid ("FTCs"). FTCs allow the Company to decrease US income tax by the amount of appropriate foreign income and withholding taxes. In the three- and nine-month periods ended September 30, 2013, the Company's effective tax rate was impacted by the effect of recognition in the third quarter of 2013 of tax benefits that the Company determined were available for offset against US taxes based on a comprehensive examination of certain positions taken in its historical US income tax filings (as discussed below). Net of this effect, its effective tax rate for the three- and nine-month periods ended September 30, 2013 would have been 30% and 34%, respectively. Income taxes provided for financial reporting are determined on a basis consistent with the tax filing positions the Company takes in its tax returns in each jurisdiction it is taxable. The Company's operating model is unique in that it is a US legal entity with substantially all of its operations outside the US, primarily in Russia. As a result, the Company's tax filing positions in the US are substantially impacted by its interpretation of tax law and how they apply in determining US taxes payable. The judgments and estimates it uses may at times significantly impact its determination of taxes payable in the US. In the third quarter of 2013, the Company substantially completed an assessment, with the assistance of a US tax advisor, on the application of certain US tax law provisions and changed its interpretation of certain positions taken in its historical US income tax filings. As a result, the Company changed its assessment of the determination of earnings and profits (E&P) from its foreign businesses used to determine the availability of FTCs to offset US taxes otherwise payable. As a result of this review, the Company determined to amend its prior years' US tax returns and to take additional credits and deductions in its 2012 tax return filed in September 2013. While the Company believes it has, and continues, to make reasonable judgments in determining its tax filing positions in each jurisdiction it is subject to tax, views may differ as to the determination of its tax obligations. These judgments may ultimately be subjected to examination by the tax authorities and further revisions may be required in the Company's estimates. It is possible that adjustments from tax audits, if any, may be material to its after-tax results of operations in future periods, including interim periods in which a tax determination becomes known. The level of sophistication and expertise with respect to complex tax laws is continually evolving both on the part of tax professionals and the taxing authorities. The effect of this change in estimate was a $19.1 million decrease in income tax expense and an increase of $19.1 million (of which $15.6 million related to periods prior to 2013) in net income for the three and nine months ended September 30, 2013. The effect on basic earnings per share and diluted earnings per share was an increase of $0.12 for the three and nine months ended September 30, 2013, respectively. The tax years ended December 31, 2010, 2011 and 2012 remain subject to examination by the Russian and US tax authorities. The tax years ended December 31, 2008 through 2012 remain subject to examination by the Kazakh tax authorities.

9. INCOME TAX

The Company is subject to US (domestic), Russian and Kazakh income taxes, based on US legislation, Russian tax legislation, Kazakh legislation and the Double Tax Treaty of 1992 between the United States and Russia (the "Treaty"). The Company's Russia- and Kazakhstan-based subsidiaries are subject to Russian and Kazakh income tax. The statutory income tax rate in Russia and Kazakhstan in 2012 and for the nine months ended September 30, 2013 was 20%. US taxable income or losses recorded are reported on CTC Media, Inc.'s US income tax return. CTC Media, Inc.'s taxable revenues consist predominantly of dividends paid by its Russian subsidiaries and interest on deposits. Dividends distributed to CTC Media, Inc. are subject to Russian withholding tax of 5% under the Treaty. Dividends distributed within Russia are subject to a withholding tax of 9% in case of ownership of less than 50%. Effective January 1, 2007, the Company elected to claim foreign tax credits in respect of Russian taxes paid ("FTCs"). FTCs allow the Company to decrease US income tax by the amount of appropriate foreign income and withholding taxes.

In the three- and nine-month periods ended September 30, 2013, the Company's effective tax rate was impacted by the effect of recognition in the third quarter of 2013 of tax benefits that the Company determined were available for offset against US taxes based on a comprehensive examination of certain positions taken in its historical US income tax filings (as discussed below). Net of this effect, its effective tax rate for the three- and nine-month periods ended September 30, 2013 would have been 30% and 34%, respectively.

Income taxes provided for financial reporting are determined on a basis consistent with the tax filing positions the Company takes in its tax returns in each jurisdiction it is taxable. The Company's operating model is unique in that it is a US legal entity with substantially all of its operations outside the US, primarily in Russia. As a result, the Company's tax filing positions in the US are substantially impacted by its interpretation of tax law and how they apply in determining US taxes payable. The judgments and estimates it uses may at times significantly impact its determination of taxes payable in the US.

In the third quarter of 2013, the Company substantially completed an assessment, with the assistance of a US tax advisor, on the application of certain US tax law provisions and changed its interpretation of certain positions taken in its historical US income tax filings. As a result, the Company changed its assessment of the determination of earnings and profits (E&P) from its foreign businesses used to determine the availability of FTCs to offset US taxes otherwise payable. As a result of this review, the Company determined to amend its prior years' US tax returns and to take additional credits and deductions in its 2012 tax return filed in September 2013.

While the Company believes it has, and continues, to make reasonable judgments in determining its tax filing positions in each jurisdiction it is subject to tax, views may differ as to the determination of its tax obligations. These judgments may ultimately be subjected to examination by the tax authorities and further revisions may be required in the Company's estimates. It is possible that adjustments from tax audits, if any, may be material to its after-tax results of operations in future periods, including interim periods in which a tax determination becomes known. The level of sophistication and expertise with respect to complex tax laws is continually evolving both on the part of tax professionals and the taxing authorities. The effect of this change in estimate was a $19.1 million decrease in income tax expense and an increase of $19.1 million (of which $15.6 million related to periods prior to 2013) in net income for the three and nine months ended September 30, 2013. The effect on basic earnings per share and diluted earnings per share was an increase of $0.12 for the three and nine months ended September 30, 2013, respectively.

The tax years ended December 31, 2010, 2011 and 2012 remain subject to examination by the Russian and US tax authorities. The tax years ended December 31, 2008 through 2012 remain subject to examination by the Kazakh tax authorities.