Interim Tax Provision Calculation

Oracle Hyperion Tax Provision provides interim provisioning based on the total estimated annualized effective tax rate as determined through the full year forecast. The forecast scenario is provided to perform the calculation of the estimated annualized effective tax rate.

Estimated Annualized Effective Tax Rate

The interim provision is performed at the legal entity level and starts with the forecasted full year pre-tax book income and the pre-tax book income adjustments. In order to determine the current and deferred estimated annualized effective tax rates, the calculation takes into account the impact of permanent and temporary differences. Tax Provision allows input of the full year estimated amounts for permanent differences as adjustments. The components of the deferred tax expense, the tax effect of temporary differences, NOLs, change in valuation allowance, and tax impact of change in tax rates are entered as adjustments in addition to the Temporary Difference data form. Discrete adjustments are ignored when determining the rate.

The current year statutory rate by legal entity is applied to the forecasted annual taxable income to determine tax expense before additional provision items. Additional provision items are added to/subtracted from tax expense to determine the year-to-date total tax and current and deferred amounts.

After the forecasted total tax expense is determined in local currency, these amounts are converted to reporting currency and then summed to determine the consolidated estimated annualized effective tax rate. The consolidated rate is determined by dividing the total interim provision tax by the pre-tax net income after book adjustments.

The deferred tax expense/(benefit) is determined by summing the tax effect of temporary differences/NOLs, plus/minus additional provision items effecting deferred tax including change in valuation allowance, and tax impact of change in tax rates. The current provision is the total tax expense/(benefit) less the deferred tax expense/(benefit).

The estimated annualized current effective tax rate is calculated by dividing the total current tax expense/(benefit) by the pre-tax net income after book adjustments. The estimated annualized deferred effective tax rate is calculated by dividing the total deferred tax expense/(benefit) by the pre-tax net income after book adjustments.

Interim Provision - Consolidated

The consolidated estimated annualized effective tax rate is applied to total year-to-date consolidated pre-tax income after adjustments to determine total tax expense/(benefit). The consolidated estimated annualized current and deferred effective tax rates are applied to total consolidated pre-tax income after adjustments to determine total current and deferred tax expense/(benefit) for purposes of recording the current receivable/(payable) and deferred tax.

Interim Provision Data Form and Report

The Interim Provision data form is used to calculate the current and deferred tax expense by multiplying the estimated annualized effective tax rate times the year-to-date profit before tax. The data form can be used at the legal entity level, applying appropriate effective tax rates, or on a consolidated basis, applying the consolidated effective tax rate.

After the tax is determined, discrete tax amounts can be added as adjustments to the total tax.