Solna, June 2, 2010 - ICA has continuously provided information on a tax dispute concerning interest deductions for the period 2001-2003 in its interim and annual reports, among other places. The Swedish Administrative Court of Appeal has now affirmed the ruling of the County Administrative Court to deny ICA interest deductions of SEK 1,795 million. The tax claim amounts to SEK 747 million.
“The Court of Appeal’s ruling is naturally a disappointment to us. Together with our legal advisors, we feel that we have acted in compliance with existing laws. We will appeal the court’s ruling to have the case heard, if possible, by the Supreme Administrative Court,” said Per Behm, General Counsel for ICA AB.
In 2007, the Swedish Tax Agency denied interest deductions by ICA Finans AB of SEK 1,795 million for the period 2001-2003. ICA appealed the ruling to the County Administrative Court, which in December 2008 ruled in favor of the Swedish Tax Agency. The tax claim included penalties and interest. ICA paid the claim of SEK 747 million in February 2009 and booked it, at that time, as a receivable on the Swedish Tax Agency.
ICA’s net income will be negatively affected by a tax expense of SEK 747 million in the second quarter, as a consequence of the decision of the Appeals court.
As of January 1, 2009 tax laws were changed for intra-group loans. When this law came in to effect, ICA’s internal financing was adapted to the new law. ICA Group’s total tax expense amounted to SEK 722 million in 2009, which corresponds to an effective tax rate of 31.3 percent.