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PZU Group

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List of GRIs

25. Income tax

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25.1 Accounting policy

Income tax shown in the profit and loss account includes the current and deferred parts.

The deferred part is the difference between the balance of deferred tax liabilities and assets at the end and at the beginning of the reporting period with a reservation that changes in deferred tax liabilities and assets related to operations charged to equity are also charged to equity.

25.2 Quantitative data

Income tax 1 January – 31 December 2021 1 January – 31 December 2020
Profit before tax (consolidated) 7 454 4 058
CIT rate (or range of CIT rates) for the country of the parent company’s seat (%) 19% 19%
Income tax which would be calculated as the product of gross accounting profit of the entities and the CIT rate in the country of the parent company’s seat 1 416 771
Differences between the income tax calculated above and the income tax shown in the profit and loss account: 604 757
– levy on financial institutions 238 223
– provisions for credit receivables in the part not covered by deferred tax 36 50
– measurement of financial assets 9 30
– recognition/reversal of impairment losses for receivables, not classified as tax-deductible expenses 45 34
– recognition/reversal of other provisions and impairment losses for assets, not classified as tax-deductible expenses 25 319
– fee payable to BFG 76 103
– tax on foreign exchange differences levied in Sweden in connection with the case described in section 46.2 72 -
– differences due to different tax rates -11 -17
– taxation of insurance activities in Ukraine 15 7
– dividends 38 -9
– tax losses 38 10
– other tax increases, waivers, exemptions, deductions and reductions 23 7
Income tax shown in the profit and loss account 2 020 1 528

Total amount of current and deferred tax 1 January – 31 December 2021 1 January – 31 December 2020
1. Recognized in the profit and loss account, including: 2 020 1 528
– current tax 1 492 1 841
– deferred tax 528 -313
2. Recognized in other comprehensive income, including: -1 209 356
– deferred tax -1 209 356

Income tax on other comprehensive income items 1 January – 31 December 2021 1 January – 31 December 2020
Gross other comprehensive income -6 357 1 958
Income tax 1 209 -356
   Valuation of debt instruments 522 -213
   Measurement of loan receivables from clients 9 -4
   Cash flow hedging 702 -123
   Valuation of equity instruments -17 -17
   Actuarial gains and losses related to provisions for employee benefits -7 1
Net other comprehensive income -5 148 1 602

The PZU Group is comprised of units operating in different countries and subject to different tax regulations. Regulations governing value added tax, corporate income tax, personal income tax or contributions to social security undergo frequent changes. The regulations in effect in the countries where the PZU Group operates also contain confusing provisions, which result in differences of opinion concerning their legal interpretation between various state authorities and enterprises. Tax and other settlements (e.g. regarding customs or foreign currencies) may be inspected by authorities (in Poland – for a period of five years), which may levy high fines and any additional liabilities assessed during the inspection bear interest. These phenomena generate tax risk, as a result of which the amounts reported in the consolidated financial statements may change at a later date after the final amounts are determined by tax authorities.