CAPGEMINI_REGISTRATION_DOCUMENT_2017

4

FINANCIAL INFORMATION

4.2 Consolidated Financial Statements

Income tax expense Note{10

The income tax expense is the sum of the current tax expense and the deferred tax expense. It is recognized in net profit, except where it relates to a business combination or items recognized in equity or in income and expense recognized in equity. Current income taxes The current income tax expense is the estimated amount of tax payable (or receivable) in respect of the taxable profit (or loss) for a period and any adjustment to the current tax

amount in respect of prior periods. The tax payable (or receivable) is calculated using tax rates that have been enacted or substantively enacted at the year-end. Deferred taxes Deferred taxes are recorded to take account of temporary differences between the carrying amounts of certain assets and liabilities and their tax basis. See Note{16 - Deferred tax.

The income tax expense for fiscal year{2017 breaks down as follows:

Note

2016

2017

in{millions of euros

Current income taxes

(131)

(261)

Deferred taxes

16

37

(42)

INCOME TAX (EXPENSE)/INCOME

(94)

(303)

The difference between the French standard rate of income tax and the effective Group tax rate can be analyzed as follows:

2016

2017

Amount

%

Amount

%

in{millions of euros

Profit before tax

1,002 34.43

1,111 34.43

Standard tax rate in France (%)

Tax expense at the standard rate

(345)

34.43

(382)

34.43

Difference in tax rates between countries

16

(1.6)

(23)

2.1

Impact of: Deferred tax assets not recognized on temporary differences and tax loss carry-forwards arising in the period Net recognition of deferred tax assets on temporary differences and tax loss carry-forwards arising prior to January{1

(26)

2.6

(23)

2.1

116

(11.6)

133

(12.0)

Remeasurement of deferred tax assets on US{tax loss carry-forwards

299

(26.9)

Impact of change in the US{federal tax rate

(295)

26.6 (0.4) (0.1)

Utilization of previously unrecognized tax loss carry-forwards

3 8

(0.3) (0.8)

5 1

Prior year adjustments

Taxes not based on taxable profit

(45)

4.5 0.1

(53) (10)

4.7 0.9

Permanent differences and other items

(1)

Income tax expense and effective tax rate before tax income (net) in respect of goodwill arising on legal restructurings Tax income (net) in respect of goodwill arising on legal restructurings Income tax (expense)/income and effective tax rate after tax income (net) in respect of goodwill arising on legal restructurings

(274)

27.3

(303)

27.3

180

(18.0)

(94)

9.3

(303)

27.3

196

REGISTRATION DOCUMENT 2017 — CAPGEMINI