Income taxes (Tables)

12 Months Ended

Dec. 31, 2018

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Summary of Income Taxes

Income taxes recognized in the income statement can be detailed as follows:

Million US dollar	2018			2017			2016
Current year		(2 819	)		(3 833	)		(1 544	)
(Underprovided)/overprovided in prior years		101			1			47
Current tax expense		(2 718	)		(3 832	)		(1 497	)
Origination and reversal of temporary differences		(287	)		1 872			(459	)
(Utilization)/recognition of deferred tax assets on tax losses		120			23			116
Recognition of previously unrecognized tax losses		46			16			227
Deferred tax (expense)/income		(121	)		1 912			(116	)
Total income tax expense		(2 839	)		(1 920	)		(1 613	)

Summary of Reconciliation of Effective Tax Rate with Aggregated Weighted Nominal Tax Rate

The reconciliation of the effective tax rate with the aggregated weighted nominal tax rate can be summarized as follows:

Million US dollar	2018			2017			2016
Profit before tax		8 530			11 076			4 334
Deduct share of result of associates and joint ventures		153			430			16
Profit before tax and before share of result of associates and joint ventures		8 377			10 646			4 318
Adjustments on taxable basis
Foreign source income		—			—			(809	)
Government incentives		(742	)		(982	)		(769	)
Non-deductible marked to market on derivatives		3 496			579			3 508
Taxable intercompany dividends		—			—			619
Other expenses not deductible for tax purposes		1 796			1 795			843
Other non-taxable income		(158	)		(178	)		(415	)
		12 769			11 860			7 296
Aggregated weighted nominal tax rate		26.8	%		28.5	%		32.7	%
Tax at aggregated weighted nominal tax rate		(3 426	)		(3 378	)		(2 387	)
Adjustments on tax expense
Utilization of tax losses not previously recognized		120			23			76
Recognition of deferred taxes assets on previous years’ tax losses		46			16			229
Write-down of deferred tax assets on tax losses and current year losses for which no deferred tax asset is recognized		(125	)		(143	)		(975	)
(Underprovided)/overprovided in prior years		65			1			63
Deductions from interest on equity		471			553			644
Deductions from goodwill		17			57			63
Other tax deductions		436			723			869
US Tax reform (change in tax rate and other)		116			1 760			—
Change in tax rate (other)		144			(59	)		(1	)
Withholding taxes		(403	)		(386	)		(286	)
Brazilian Federal Tax Regularization Program		—			(870	)		—
Other tax adjustments		(300	)		(217	)		93
		(2 839	)		(1 920	)		(1 613	)
Effective tax rate		33.9	%		18.0	%		37.4	%

Summary of Detail Information of Income Tax Recognized in Other Comprehensive Income

Income taxes were directly recognized in other comprehensive income as follows:

Million US dollar	2018		2017			2016
Re-measurements of post-employment benefits		22		(39	)		54
Cash flow and net investment hedges		108		(95	)		(258	)
Income tax (losses)/gains		130		(134	)		(204	)