Operations in 2002 Quarterly Data and Key Figures Board Report Consolidated Financial Statements Parent Company Financial Statements Financial Notes Auditors’ Report The Share Corporate Governance

	Financial Notes		Reports 2002  >  Financials 2002  >  Financial Notes  >  Note 9 - Income Taxes Financial Notes All Notes 1.Accounting Principles 2.Financial Risk Management 3.Segment Information 4.Discontinued Operations 5.Acquisitions and Disposals 6.Other Operating Income 7.Staff Costs 8.Net Financial Items 9.Income Taxes 10.Depreciation, Amortisation... 11.Fixed Assets 12.Associated Companies 13.Available-for-Sale Investments 14.Other Non-Current Assets 15.Inventories 16.Receivables 17.Shareholders' Equity 18.Post-employment Benefits 19.Borrowings 20.Other Current Liabilities... 21.Financial Instruments 22.Commitments and Contingencies 23.Principal Subsidiaries... 24.Employee and Equity... 25.Earnings per Share 26.Subsequent Events 1.Accounting Principles 2.Other Operating Income 3.Materials and Services 4.Personnel Expenses 5.Other Operating Expenses 6.Net Financial Items 7.Depreciation According to Plan 8.Extraordinary Items 9.Fixed Assets 10.Depreciation Reserve 11.Receivables from Management 12.Long-term Investments... 13.Inventories 14.Short-term Receivables 15.Interest-Bearing Receivables 16.Shareholders' Equity 17.Long-term Liabilities 18.Short-term Borrowings 19.Other Current Liabilities 20.Commitments and Contingent... 21.Fair Value of Open Financial... Consolidated Financial Statements Note 9 - Income Taxes Profit before Tax and Minority Interests Income Tax Expense Income Tax Reconciliation Reconciliation of Deferred Tax Balances in 2002 Reconciliation of Deferred Tax Balances in 2001   Profit before Tax and Minority Interests Year Ended 31 December         EUR million 2000 2001 2002 Finnish companies 780.5 796.5 353.7 Swedish companies 989.7 541.2 539.4 German companies 167.2 210.9 107.9 Other companies 161.6 -325.6 -1 344.2 Total 2 099.0 1 223.0 -343.2 Income Tax Expense Year Ended 31 December EUR million 2000 2001 2002 Current Tax Expense Finnish companies 194.5 176.8 -98.6 Swedish companies 235.8 159.8 106.4 German companies 166.0 161.4 50.0 Other companies 77.2 20.8 58.6 Change in Deferred Taxes Finnish companies 30.5 67.0 -103.2 Swedish companies 11.4 -20.6 47.7 German companies -62.7 -156.1 -2.1 Other companies -9.4 -132.5 -179.4 Associated Company Taxes 7.0 23.0 -0.3 Total 650.3 299.6 -120.9 Income Tax Reconciliation Year Ended 31 December EUR million 2000 2001 2002 Tax at domestic rates applicable to profits in the country concerned 624.2 352.0 -249.6 Non-deductible expenses and tax exempt income 38.6 57.9 34.5 Losses where no deferred tax benefit is recognised -1.3 -14.9 33.7 Impairment of North American assets - - 363.2 Write-down of shares in Stora Enso North America Corp. - - -298.4 Change in legal status, Germany - -86.6 0 Other items -11.2 -8.8 -4.3 Income Taxes in the Consolidated Income Statement 650.3 299.6 -120.9 Effective Tax Rate 31.0% 24.5% 35.2% In 2002 Stora Enso wrote down the surplus acquisition value of its North American assets by USD 1 081.0 (EUR 1 143.3) million, and a related write-down of EUR 1 028.8 million was also made in the books of Stora Enso Oyj in respect of the reduced value of its investment in Stora Enso North America Corp. The Finnish tax authorities have confirmed that tax relief will be given on this and at the current tax rate of 29%, this amounts to EUR 298.4 million; EUR 253.4 million will be utilised against the 2002 results with the balance of EUR 45.0 million being deferred to 2003. Group tax excluding these effects represents a tax rate of 31.4%. An increase in the tax base of German assets in 2001 following a change in the legal status of former Feldmühle subsidiaries resulted in a tax credit of EUR 86.6 million for that year, thereby lowering the Group effective tax rate to 24.5% from 31.6%. The Group has recognised a deferred tax asset for its net operating loss carry-forwards and established a valuation allowance against this amount based on an analysis of the probability for set-off against future profits in the relevant tax jurisdictions. At 31 December 2002 Stora Enso had losses carried forward, mainly attributable to foreign subsidiaries, of EUR 1 055 (EUR 890) million of which some EUR 421 million had no expiry date, EUR 91 million expire during the years 2003-2007 and the remainder expire thereafter. Tax loss carry-forwards are netted against deferred tax liabilities within each jointly taxed group of companies and are only shown separately as an asset to the extent that they exceed such liabilities. No deferred tax liability has been recognised for the undistributed earnings of Finnish subsidiaries as, in most cases, such earnings may be transferred to the Parent Company without any tax consequences. The Group does not provide for deferred taxes on undistributed earnings of non-Finnish subsidiaries to the extent that such earnings are intended to be permanently reinvested in those operations.
	Reconciliation of Deferred Tax Balances in 2002 As at Charge Acquisitions     As at 1 Jan in Income and 31 Dec EUR million 2002 Statement Divestments CTA OCI 2002 Deferred Tax Liabilities Depreciation differences and untaxed reserves 1 715.1 -168.8 0.7 -86.6 - 1 460.4 Group eliminations 10.8 14.1 - - -0.7 24.2 Tax losses c/fwd and other temporary differences -273.1 -23.3 0.3 34.7 - -261.4 Fair value adjustments for acquired net assets 536.6 -34.4 5.6 -39.8 - 468.0 1 989.4 -212.4 6.6 -91.7 -0.7 1 691.2 Fair valuation of available-for-sale investments and derivative financial instruments 21.6 - - - 74.5 96.1 2 011.0 -212.4 6.6 -91.7 73.8 1 787.3 Deferred Tax Assets             Tax losses carried forward 103.2 41.7 - - - 144.9 Less valuation allowance -75.1 -17.1 - - - -92.2 28.1 24.6 - - - 52.7 Change in Net Deferred Tax Liabilities 1 982.9 -237.0 6.6 -91.7 73.8 1 734.6           OCI = Other Comprehensive Income Statement – see note 21 CTA = Cumulative Translation Adjustment   Reconciliation of Deferred Tax Balances in 2001 As at Charge Acquisitions     As at 1 Jan in Income and 31 Dec EUR million 2001 Statement Divestments CTA OCI 2001 Deferred Tax Liabilities Depreciation differences and untaxed reserves 1 744.0 -5.1 -29.1 5.3 - 1 715.1 Group eliminations -15.8 13.8 - - 12.8 10.8 Tax losses c/fwd and other temporary differences -54.0 -218.3 1.5 -2.3 - -273.1 Fair value adjustments for acquired net assets 573.3 -16.2 -28.8 8.3 - 536.6 2 247.5 -225.8 -56.4 11.3 12.8 1 989.4 Fair valuation of available-for-sale investments and derivative financial instruments 27.6 - - - -6.0 21.6 2 275.1 -225.8 -56.4 11.3 6.8 2 011.0 Deferred Tax Assets             Tax losses carried forward 70.5 32.7 - - - 103.2 Less valuation allowance -58.8 -16.3 - - - -75.1 11.7 16.4 - - - 28.1 Change in Net Deferred Tax Liabilities 2 263.4 -242.2 -56.4 11.3 6.8 1 982.9 All Notes 1.Accounting Principles 2.Financial Risk Management 3.Segment Information 4.Discontinued Operations 5.Acquisitions and Disposals 6.Other Operating Income 7.Staff Costs 8.Net Financial Items 9.Income Taxes 10.Depreciation, Amortisation... 11.Fixed Assets 12.Associated Companies 13.Available-for-Sale Investments 14.Other Non-Current Assets 15.Inventories 16.Receivables 17.Shareholders' Equity 18.Post-employment Benefits 19.Borrowings 20.Other Current Liabilities... 21.Financial Instruments 22.Commitments and Contingencies 23.Principal Subsidiaries... 24.Employee and Equity... 25.Earnings per Share 26.Subsequent Events 1.Accounting Principles 2.Other Operating Income 3.Materials and Services 4.Personnel Expenses 5.Other Operating Expenses 6.Net Financial Items 7.Depreciation According to Plan 8.Extraordinary Items 9.Fixed Assets 10.Depreciation Reserve 11.Receivables from Management 12.Long-term Investments... 13.Inventories 14.Short-term Receivables 15.Interest-Bearing Receivables 16.Shareholders' Equity 17.Long-term Liabilities 18.Short-term Borrowings 19.Other Current Liabilities 20.Commitments and Contingent... 21.Fair Value of Open Financial...