14. Income Taxes

Schlumberger operates in more than 100 tax jurisdictions, where statutory tax rates generally vary from 0% to 40%.

Income from continuing operations before taxes which were subject to United States and non-United States income taxes for each of the three years ended December 31, were as follows:

	(Stated in millions)

	2013		2012		2011
United States	$	1,904	$	1,980	$	2,246
Outside United States		6,787		4,979		3,772
	$	8,691	$	6,959	$	6,018

Schlumberger recorded net pretax credits of $420 million in 2013 ($53 million of charges in the US and $473 million of net credits outside of the US). Schlumberger recorded $161 million of pretax charges in 2012 ($52 million in the US and $109 million outside the US) and $223 million of pretax charges in 2011 ($104 million in the US and $119 million outside the US). These charges and credits are included in the table above and are more fully described in Note 3 – Charges and Credits.

The components of net deferred tax assets (liabilities) were as follows:

	(Stated in millions)

	2013			2012
Postretirement benefits	$	236		$	543
Intangible assets		(1,502	)		(1,490	)
Investments in non-US subsidiaries		(282	)		(317	)
Other, net		128			114
	$	(1,420	)	$	(1,150	)

The above deferred tax balances at December 31, 2013 and 2012 were net of valuation allowances relating to net operating losses in certain countries of $238 million and $256 million, respectively.

The components of Taxes on income were as follows:

	(Stated in millions)

	2013			2012			2011
Current:
United States - Federal	$	682		$	698		$	809
United States - State		60			53			42
Outside United States		1,211			1,025			667
	$	1,953		$	1,776		$	1,518
Deferred:
United States - Federal	$	(109	)	$	(105	)	$	(73	)
United States - State		(4	)		(7	)		(7	)
Outside United States		34			22			75
Valuation allowance		(26	)		14			(21	)
	$	(105	)	$	(76	)	$	(26	)
	$	1,848		$	1,700		$	1,492

A reconciliation of the United States statutory federal tax rate (35%) to the consolidated effective tax rate is:

	2013			2012			2011
US statutory federal rate		35	%		35	%		35	%
Non-US income taxed at different rates		(12	)		(10	)		(9	)
Charges and credits (See Note 3)		(2	)		—			—
Other		—			(1	)		(1	)
		21	%		24	%		25	%

Schlumberger conducts business in more than 100 tax jurisdictions, a number of which have tax laws that are not fully defined and are evolving. Schlumberger’s tax filings are subject to regular audit by the tax authorities. Tax liabilities are recorded based on estimates of additional taxes which will be due upon the conclusion of these audits.

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions for the years ended December 31, 2013, 2012 and 2011 is as follows:

	(Stated in millions)

	2013			2012			2011
Balance at beginning of year	$	1,453		$	1,353		$	1,338
Additions based on tax positions related to the current year		146			156			153
Additions for tax positions of prior years		109			98			49
Additions related to acquisitions		—			—			48
Impact of changes in exchange rates		(47	)		12			(18	)
Settlements with tax authorities		(64	)		(17	)		(77	)
Reductions for tax positions of prior years		(109	)		(103	)		(102	)
Reductions due to the lapse of the applicable statute of limitations		(36	)		(46	)		(38	)
Balance at end of year	$	1,452		$	1,453		$	1,353

The amounts above exclude accrued interest and penalties of $253 million, $250 million and $225 million at December 31, 2013, 2012 and 2011 respectively.

Schlumberger classifies interest and penalties relating to uncertain tax positions within Taxes on income in the Consolidated Statement of Income. During 2013, 2012 and 2011, Schlumberger recognized $30 million, $21 million and $15 million in interest and penalties, respectively.

The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Schlumberger operates:

Brazil	2008 - 2013
Canada	2006 - 2013
Mexico	2007 - 2013
Norway	2013
Russia	2010 - 2013
Saudi Arabia	2001 - 2013
United Kingdom	2009 - 2013
United States	2008 - 2013

In certain of the jurisdictions noted above, Schlumberger operates through more than one legal entity, each of which has different open years subject to examination. The table above presents the open years subject to examination for the most material of the legal entities in each jurisdiction. Additionally, it is important to note that tax years are technically not closed until the statute of limitations in each jurisdiction expires. In the jurisdictions noted above, the statute of limitations can extend beyond the open years subject to examination.