20. Taxation

The Group’s income tax expense recognized in the consolidated statement of profit or loss and other comprehensive loss was as follows:

	2017			2016		2015
Deferred income tax expense		(21,415	)		—		(32,761	)
Deferred income tax gain		39,188			131,055		32,761
		17,773			131,055		—

The Group’s effective income tax expense differed from the expected theoretical amount computed by applying the Group’s applicable weighted average tax rate of 21.7% in 2017 (2016: 21.5%, 2015: 21.9%) as summarized in the following table:

	2017			2016			2015
Reconciliation
Loss before income tax		(24,427,247	)		(30,793,306	)		(29,705,063	)
Income tax at statutory tax rates applicable to results in the respective countries		5,311,030			6,629,237			6,493,569
Effect of unrecognized temporary differences		193,598			(27,072	)		(105,395	)
Effect of unrecognized taxable losses		(5,429,935	)		(6,360,837	)		(6,438,609	)
Effect of previously unrecognized deferred tax asset		39,189			131,055			—
Effect of expenses deductible for tax purposes		9,696			2,505			—
Effect of expenses not considerable for tax purposes		—			23,716			—
Effect of impact from application of different tax rates		(105,805	)		(267,695	)		—
Effect of unrecognized taxable losses in equity		—			146			50,435
Income tax gain		17,773			131,055			—

The tax effect of taxable temporary differences that give rise to deferred income tax liabilities or to deferred income tax assets as of December 31 is presented below:

	December 31, 2017			December 31, 2016
Deferred Tax Liabilities
Intangible assets		(349,052	)		(327,637	)
Hercules Loan Facility		(47,477	)		(76,390	)
Total		(396,529	)		(404,027	)

	December 31, 2017			December 31, 2016
Deferred Tax Assets
Net operating loss (NOL)		217,720			207,445
Total		217,720			207,445
Deferred Tax, net		(178,809	)		(196,582	)

Deferred Tax 2017	Opening Balance			Recognized in Profit or Loss			Recognized in Equity		Closing Balance
Intangible assets		(327,637	)		(21,415	)		—		(349,052	)
Hercules Loan Facility		(76,390	)		28,913			—		(47,477	)
Net operating loss (NOL)		207,445			10,275			—		217,720
Total		(196,582	)		17,773			—		(178,809	)

Deferred Tax 2016	Opening Balance			Recognized in Profit or Loss			Recognized in Equity		Closing Balance
Intangible assets		(327,637	)		—			—		(327,637	)
Hercules Loan Facility		—			(76,390	)		—		(76,390	)
Net operating loss (NOL)		—			207,445			—		207,445
Total		(327,637	)		131,055			—		(196,582	)

As of December 31, 2017, the Group had total gross tax loss carry forwards amounting to CHF 142 million (2016: CHF 115.4 million), of which CHF 140.9 million related to Auris Medical AG, Auris Medical Holding AG and Otolanum AG in Switzerland and CHF 1.1 million to Auris Medical Inc. in the United States (2016: CHF 114.3 million for Auris Medical AG and Otolanum AG and CHF 1.1 million for Auris Medical Inc.).

The Group’s tax loss carry-forwards with their expiry dates are as follows:

	December 31, 2017		December 31, 2016
Within 1 year		1,754,398		1,859,601
Between 1 and 3 years		31,089,191		9,928,391
Between 3 and 7 years		108,055,089		102,542,641
More than 7 years		1,072,260		1,087,543
Total		141,970,938		115,418,176

The tax effect of the major unrecognized temporary differences and loss carry-forwards is presented in the table below:

	December 31, 2017		December 31, 2016
Deductible temporary differences
Employee benefit plan		433,816		450,227
Stock option plans		400,764		—
Total potential tax assets		834,580		450,227
Taxable unrecognized temporary differences
Property and equipment		—		—
Total unrecognized potential tax liabilities		—		—
Offsetting potential tax liabilities with potential tax assets		—		—
Net potential tax assets from temporary differences not recognized		834,580		450,227
Potential tax assets from loss carry-forwards not recognized		29,959,963		25,082,968
Total potential tax assets from loss carry-forwards and temporary differences not recognized		30,794,543		25,533,195